So, I am at a loss of what my next step should be. I currently own three propertues. One being my personal home, one is the house my wife had bought before I met her (which we now have rented out), and the other is a sfr. I took the equity out of our personal home to purchase the rental. We got it all fixed up and we are making a very good return on it. We're not making hardly any return on the one my wife previously owned. Our newest rental (the one bought with the equity) has no mortgage attached to it. So all that equity is there. I would like to take the equity from that and purchase another one. Problem is, I bought it in my wife's name. She doesn't have the income history the bank is looking for and her debt to income is too high due to using credid for repairs. I have solid job history but my debt to income ratio is even worse than hers since I too used credit through Lowe's for repairs. They also want a crazy amount of cash reserves set aside. What's my next step here? I can elaborate more if you questions.
@Thomas Loy , some decisions SEEM right for Tax purposes - but can end up biting where it hurts! Would your wife agree to sell the house she already bought, seeing as it's not really producing much net income anyway? THERE'S some cash to aid your strategy next time! Cheers...
Thanks for the reply. The problem with selling that house, we would end up having to bring money to the table. She bought it at market value at the time. She was eager to buy and then the market went down a bit.
@Thomas Loy , ouch! And ouch!...
Pay down your credit cards and look into creative financing. You don't need a bank (right now).
Jacqueline Carrington is right. Patience is probably your best friend right now. Focus on paying down your credit cards and lowering your debt to income ratio first.
Be your own bank! You have equity locked up in a house that you can not refi? No problem, make a loan to yourself to be used to make offers on properties
- You can create a note and mortgage on the house with the equity
- You make an offer on a house subject to the seller accepting your newly created note.
- Call a title company, tell them you want to create a note on your property for, say $20,000 at 3 percent amortized for 20 years with payments of X $. (you can dictate your own terms)
- Using this system is almost like owner financing, but you do not have to ask for a loan, you already created one that you can use as you please.
- The other thing you can do is sell your newly created note at a discount to a note buyer for cash.
- Creating notes on equity can really propel your investing career
I would probably hold off and get your financials straight before jumping into a new venture.
You don't want to bind or lose what you already created.
@Charles Parrish, I need some help understanding how this works. I called a title company, they "do not do that type of thing". I was referred to an attny who deals with these types of matters. He says I still need someone to fork over the money, as in a conventional mortgage the bank would. So basically, who's the bank?
You may want to find a better and smarter title company.
You tell them that you want to record a mortgage on your property, state the terms, amortized for 25 years, interest rate of 3 percent with payment of X. You may want to consider split notes also.
This concept is a little advanced, but don't worry, not all title companies have the smarts to understand your needs if it is outside on conventional stuff.
if DTI is the issue then use the proceeds from the cash out refinance to pay off the debt used for repairs and any others affecting your DTI. I just did this if you have questions.