Hi All-

I'm looking for some advice on refinancing. My wife and I both own two homes, our primary and a rental home we used to live in.

I left my job earlier this year and have a large chunk of savings I intend to use for real estate investing, looking to start doing it full time. My wife is still working full time. In the meantime we want to be taking advantage of the great rates for existing mortgages. 

We just recently refinanced our primary home and were advised to only put my wife on the loan (since she is the one currently employed and by adding myself we weren't gaining anything.)

Now we are looking at refinancing our rental property. Does it also make sense to have my wife be the only one on the loan?

Since these home loans are typically based on debt-to-income and I am not currently employed, I'm not sure the best course of action. It would definitely free up debt if just my wife was on the refinance loan (we are both currently on the rental property loan) but I'm not sure how this will affect us in the future. 

For example if in a few months I find some good properties I want to invest in... Would it be better for myself to have no mortgages and just have them in my wife's name? We are open to having one or both of us on current and future mortgages, just not sure the best way to do this.

Thanks for any advice and thoughts.

@Sean Kelley this is a good topic to discuss with your lender. As I understand it: whoever signs for a mortgage and is on title, it will affect his or her DTI with all the income and expenses. If you do not sign for the mortgage but are on title, the income counts toward your DTI but only taxes and insurance count against it, not the mortgage. It's quite common for married couples to alternate signing for the mortgages while having one or both on title. Is this correct @chris mason ?

@Brian Gerlach thanks, this is helpful. That's the route we are going.

@Sean Kelley

Fannie Mae allows up to 10 properties per individual, so by keeping everything separate, you can have 10 and your wife can have 10 as long as you each qualify separately.

Hope that answers your question

Stephanie

@Stephanie P. Question: Can my wife and I be on title for 20 properties if each of us sign for 10 mortgages? ie does being on title count against the 10 loan max per individual?

@Brian Gerlach

No.  Their verbiage is "no more than 10 financed properties".  In that instance, she'd be on title to 20 properties that are financed either by you or her.

@Stephanie P. to reach 20 then we both need to qualify/sign for/be on title to 10 properties each separately? ie only be on title to those properties we sign for?

@Brian Gerlach

That's correct

@Stephanie P. Is this true if it involves a non-married partner? ie if I’m on title with a partner but not on the hook for the mortgage it counts against my 10 conventional loan limit?

@Brian Gerlach

Marriage is just the loop hole.

If you're on title with anyone, a partner, your lovely bride, your brother or your cousin that can fix things AND THAT PROPERTY IS FINANCED, it counts against your 10 conventional limit because that property is encumbered and you own it.

Now, if that property doesn't show up on your taxes because your partner claims it or if that property is owned in an LLC and is encumbered by a commercial loan, that's a different story. The LLC is on the hook for the property and if the mortgage doesn't show up on your personal credit because the loan is in the name of the corporation, then you are free to use conventional financing.

Hope that helps

Stephanie

@Stephanie P. My mortgage broker @Parker Borofsky has a little different take. Maybe she can chime in.

@Brian Gerlach @Parker Borofsky see above

@Stephanie P. and @Brian Gerlach

Per FNMA Freddie guidelines, the 10 financed property rule only applies to properties in which you are personally obligated on the debt.  Freddie Mac guidelines are written a little more clearly than Fannie's but they are the same when it comes to counting the 10.  (the reserves requirement is a little different for Freddie)

Freddie Mac guideline:

Each Second Home or Investment Property Mortgage must meet the following requirements:
• Each Borrower individually and all Borrowers collectively MUST NOT BE OBLIGATED ON (e.g., Notes, land contracts and/or any other debt or obligation) more than 10 (ten) 1-4 unit financed properties, including the subject property and the Borrower's Primary Residence, provided that, when the number of 1-4 unit financed properties (including the subject property and the Borrower's Primary Residence) is greater than
6 (six), the Mortgage must:
o have a minimum Indicator Score of 720 AND

o 8 months of the monthly payment amount on each additional second home and/or 1-4 unit
Investment Property that is financed and on which the borrower is obligated.

Are you intending to return to w-2 work? You alone probably can't qualify now with no income as the one rental probably doesn't show huge net profit to cover your car, credit cards and other bills on credit report. It may be too early to talk about putting wife alone on ten and you on ten, and are you still joint on title? (please say yes) Also too early to talk about the heavy cost of LLC and more expensive commercial loans. Refinance now for the lowest rate with no points, little fees and start building your savings.

@Brian Gerlach and @Parker Borofsky

Parker, 

If you have had a lender close a loan with the scenario described above (partner etc...), congratulations.  I haven't seen it.
According to the Fannie Mae Seller's Guide (see link below).  Sentences underlined by me, not Fannie.

"The number of financed properties calculation includes:

• the number of one- to four-unit residential properties where the borrower is personally obligated on the mortgage(s), even if the monthly housing expense is excluded from the borrower's DTI in accordance with B3-6-05, Monthly Debt Obligations
• the total number of properties financed, not to the number of mortgages on the property or the number of mortgages sold to Fannie Mae (a multiple unit property counts as one property, such as a two-unit); the borrower’s principal residence if it is financed; and
• the cumulative total for all borrowers (though jointly financed properties are only counted once). For HomeReady loans, financed properties owned by a non-occupant co-borrower that are owned separately from the borrower are excluded from the number of financed properties calculation."

https://selling-guide.fanniema...

Best of luck

Stephanie

Sorry @Stephanie P. but your interpretation is incorrect.  I triple checked this with underwriting and also a 3rd party we use for guideline interpretation.  Both confirmed that we do not count financed properties for those in which the borrower is not personally obligated on the loan.  I never post on here if I have not at least double checked myself with guidelines.

I understand the Fannie Mae language is confusing, which is why I posted verbatim the Freddie Mac guideline, because they were more evident and easier to understand.  

The purpose of the second bullet point you referenced is to clarify it's the number of properties and not number of mortgages against the properties (i.e. HELOC's/secondary financing).  They left out the word "personally obligated" however, this is written in the first bullet point.

The second bullet point:

• the total number of properties financed, not to the number of mortgages on the property or the number of mortgages sold to Fannie Mae (a multiple unit property counts as one property, such as a two-unit); the borrower’s principal residence if it is financed; and

If you still don't believe me, feel free to send me any clients you have to turn away for max # of financed properties in this situation and I will get them financed!  :)

@Parker Borofsky

Fannie Mae doesn't just "leave out" verbiage but I'll be sure to send those folks your way.

Best of luck

Stephanie

Originally posted by @Sean Kelley :

Hi All-

I'm looking for some advice on refinancing. My wife and I both own two homes, our primary and a rental home we used to live in.

I left my job earlier this year and have a large chunk of savings I intend to use for real estate investing, looking to start doing it full time. My wife is still working full time. In the meantime we want to be taking advantage of the great rates for existing mortgages. 

We just recently refinanced our primary home and were advised to only put my wife on the loan (since she is the one currently employed and by adding myself we weren't gaining anything.)

Now we are looking at refinancing our rental property. Does it also make sense to have my wife be the only one on the loan?

Since these home loans are typically based on debt-to-income and I am not currently employed, I'm not sure the best course of action. It would definitely free up debt if just my wife was on the refinance loan (we are both currently on the rental property loan) but I'm not sure how this will affect us in the future. 

For example if in a few months I find some good properties I want to invest in... Would it be better for myself to have no mortgages and just have them in my wife's name? We are open to having one or both of us on current and future mortgages, just not sure the best way to do this.

Thanks for any advice and thoughts.

My wife and I have always separated who signs for each mortgage when possible,  doubling the number of loans we can finance conventionally if we choose to. You've accidentally discovered what is optimal to do if you plan to scale.

Most times the one of us not on the loan can't be on the deed.  I am comfortable with this because we are in a community property state.   Your state is a mystery, so check.  If it's not, you will probably want to have a community property agreement drafted and recorded. 

As far as obtaining loans without a 'job', it is difficult.  I haven't had one in 18 years so I know. I established a mgt corp in 2003 for my portfolio so Ive had 'business income' to split with my wife, helping us each qualify individually.  YMMV so consult with a legal and tax pro if your portfolio grows enough to consider that. 

@Caroline Gerardo yes I am on the title still, but curious why you ask. We do live in WA state which is a community property state. I have plenty of savings to invest and great credit but ideally would like to stick with residential loans since the rate is better... commercial loans are definitely an option though. Sounds like my wife and I may have to put initial properties in her name since I'm not currently planning to return to a W2 job anytime soon. 

Even though you are in community property state, wife is free to sell or change title without your signature. If you get separated...