sorry if it is a stupid question.
Does the sellers financing show up on a credit report? Or in other words, do banks see it?
For example, if I have 10 properties that are seller financed, does it mean I wont qualify for a regular conventional loan? Because banks will see that I already have 10 properties seller financed?
@Mary Jay not typically, even if the loan is serviced through a third party. It costs creditors money to report to the bureau's.
I had a similar question too since I have a couple seller financed properties. Even if they can't "see" it on a credit report, won't they find out through tax returns?
Originally posted by @Tom S. :
@Mary Jay @Chris Szepessy Exactly - it will still show on your tax returns, loan application and bank statements, even if not reported on your credit.
Do I understand correctly, even though it shows on the tax return as rental income, as long as you dont do any depreciation and as long as the lender does not ask If I owe anything on those, then it may be not considered as a loan...Unless the lender starts digging/asking questions, then obviously I am not gonna lie. So far lenders asked me only on what shows up on credit report...(although I do not have any sellers financed properties yet)
@Mary Jay A few things here: on your loan application you're supposed to list all debts, otherwise it's mortgage fraud. So it should be disclosed up front. Your bank statements will also show the monthly payments.
On your tax return you have to depreciate the property, I don't believe it's an option to show depreciation or not. Finally, the seller financed mortgage interest is tax deductible, so you're losing out on your taxes if it's not on your Sch E.
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