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Between my wife and I, we have approximately $325k in credit limits, and a 780FICO. I'd like to purchase ANOTHER rental property but don't have all the funds necessary for the down payment and reserves required by the lender.

My DTI can easily support the additional debt taken out of the CCs since many of my CCs offer 0% for 12-18 months and only require a 1-2% monthly repayment of the debt.

So I can get the cash off my cards, and have already begun to do this.

My questions is...when the lender does the "Verification of Deposit" will they take my bank accounts and subtract any unsecured loans from that? I know that they say your can't use unsecured loans for the downpayment or reserves, but if I take the cash out, and leave it in my bank account for 2+ months so they can see the money is vetted (and 2 full bank statements to prove it, is that ok?

Example: I have $50k in bank account. I take $50k from CCs and deposit into bank account since I need $100k for the downpayment and reserves. I let it sit in the bank account for 2 months so I can show statements and the 2 month average balance they'll confirm on the "Verification of Deposit" will be $100k.

When I go to close, will they subtract the $50k since it is an unsecured loan?

Please don't tell me why this is a bad idea, etc. I don't need a lecture, just an answer, hopefully from a loan officer or underwriter.

Thanks.

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PatrickM213 (Apr. 30, 2012 @ 2:44p) |

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eferrari377 (Apr. 30, 2012 @ 2:56p) |

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eferrari377 said:   and a 780 FICONot after this

So it should be ok?

I have read things online like "Borrowed funds may be used for the mortgage transaction provided the money comes from a secured loan other than a lien on the subject property, Unsecured loans are not acceptable."

Are they only talking about if they blatantly see a deposit from my CC right before I close? But as long as the money from the CC is vetted, and paid properly for the past 2 months, it's ok?

FYI: Most lenders revert to approximately 1.5% of the total calculated monthly for your DTI. That is a lot higher than for something like a mortgage where due to its length of duration is more like .5% of the total equaling the monthly payment for your DTI.

I'm sure my FICO will remain very high (in the 740+ range), since I have such high credit limits, no one CC that I withdraw from will be over 30% debt to limit. As long as I keep under that ratio, my FICO should be plenty good.

I asked the lender, and he said they just look at the minimum payment for a CC debt to calc my DTI ratio. So for my Citi and BofA CCs, it is only 1%. Damn Chase is 2% though. Not sure why...

eferrari377 said:   I asked the lender, and he said they just look at the minimum payment for a CC debt to calc my DTI ratio. So for my Citi and BofA CCs, it is only 1%. Damn Chase is 2% though. Not sure why...

It depends a little on the lender, but if there is ever a question about what the minimum is they usually revert it to 1.5%.

And the reason is quite simple. In debt its all about cash flows and less so balances. They want to make sure that they are accurately representing your continued *debt service* and making sure that you can keep up with that.

So what's your plan after the 12 months when the 0% offers are gone and your credit is down due to your high card utilization? If the plan is to pay it off completely if you'll have the money by then, why not wait and save it to buy the house in ~12 months?

eferrari377 said:   I have read things online like "Borrowed funds may be used for the mortgage transaction provided the money comes from a secured loan other than a lien on the subject property, Unsecured loans are not acceptable." Are they only talking about if they blatantly see a deposit from my CC right before I close?You are contractually representing that the funds used for the mortgage transaction did not come from unsecured loans

Ok, good to know. Even with 1.5, my DTI is ok. Thanks.

I'm having to do all this because lenders now require 6 months reserves for every property you own, AND a 25% downpayment. So the required reserves amount starts to add up quickly.

Once I hit 10 properties I'll be really screwed and have to really start to get creative with financing due to the 10 property cap most lenders have.

Alternatively, if possible, buy it as an owner-occupied mortgage so you don't need as big a down (not to mention better interest rates). You have to live there for 6-12 months, depending on your lender, before you can rent it out, and you usually have to move in within 60 days of closing. EG I'm with penfed and I inquired if it it would be okay to move out and rent a year after a year and they told me that would be fine. Although you may run into resistant if you get more than one owner occupied mortgage with same lender. I wouldn't try to hide your intentions from the bank though. Speak up and ask them. You don't want to mess with mortgage fraud.

chantspel said:   So what's your plan after the 12 months when the 0% offers are gone and your credit is down due to your high card utilization? If the plan is to pay it off completely if you'll have the money by then, why not wait and save it to buy the house in ~12 months?

I'll add the question, *what other sources of liquidity to you have access to tap* because you definitely need an exit strategy if lenders wont give you more 0% offers. Lenders are still pretty stingy when they see a non pristine balance sheet.

chantspel said:   So what's your plan after the 12 months when the 0% offers are gone and your credit is down due to your high card utilization? If the plan is to pay it off completely if you'll have the money by then, why not wait and save it to buy the house in ~12 months?

Yes, I am saving a crap load of money right now and can pay it off in 12 months, but don't want to wait to purchase. And for 0% money, why not! In 12 months I will either pay it off, or transfer to another CC if I have an offer. My citicard is offering 0% for 18 months, so I'm golden there.

I'll worry about paying off the debt later (which I will have no problem doing).

>> Please don't tell me why this is a bad idea, ~ <<

Okay, I won't tell you why it's a bad idea.

Comit said:   Alternatively, if possible, buy it as an owner-occupied mortgage so you don't need as big a down (not to mention better interest rates). You have to live there for 6-12 months, depending on your lender, before you can rent it out, and you usually have to move in within 60 days of closing. EG I'm with penfed and I inquired if it it would be okay to move out and rent a year after a year and they told me that would be fine. Although you may run into resistant if you get more than one owner occupied mortgage with same lender. I wouldn't try to hide your intentions from the bank though. Speak up and ask them. You don't want to mess with mortgage fraud.

Already thought of that. I already own my own home and is much nicer than the rentals, so saying that I'm going to purchase a home and move into it that's 1/2 the value of my house doesn't make sense and the lender isn't stupid. I agree, don't want to mess with mortgage fraud.

dshibb said:   chantspel said:   So what's your plan after the 12 months when the 0% offers are gone and your credit is down due to your high card utilization? If the plan is to pay it off completely if you'll have the money by then, why not wait and save it to buy the house in ~12 months?

I'll add the question, *what other sources of liquidity to you have access to tap* because you definitely need an exit strategy if lenders wont give you more 0% offers. Lenders are still pretty stingy when they see a non pristine balance sheet.


For this property, I can actually pay it back after I buy. The down payment is only $50k (which I have in the bank), but the lender is requiring that I have $100k total for DP and reserves. So I could borrow the $50k for just a few months, then repay it....or buy another property

xoneinax said:   eferrari377 said:   I have read things online like "Borrowed funds may be used for the mortgage transaction provided the money comes from a secured loan other than a lien on the subject property, Unsecured loans are not acceptable." Are they only talking about if they blatantly see a deposit from my CC right before I close?You are contractually representing that the funds used for the mortgage transaction did not come from an unsecured loan

Indirectly all unsecured loans outstanding finance the mortgage down payment. Money is fungible. Anybody that says that its okay to buy everything on credit card for the next 6 months, carry a balance, and then as a result have a lot more in savings but its not okay to just take out a balance transfer and drop it in your account are clearly missing something. If lenders actually cared about this they would actually just ban anybody from getting a mortgage even if they a small amount of unsecured debt.

I say this fully acknowledging the fact that you yourself would know that you are abusing the rule of the law, but its also almost impossible to prove when talking about the fungibility of money(and any law that isn't broken when you take advantage of the fungibility of money is stupid and should involve you doing that every time to get around it--just don't make it obvious).

dshibb said:   xoneinax said:   eferrari377 said:   I have read things online like "Borrowed funds may be used for the mortgage transaction provided the money comes from a secured loan other than a lien on the subject property, Unsecured loans are not acceptable." Are they only talking about if they blatantly see a deposit from my CC right before I close?You are contractually representing that the funds used for the mortgage transaction did not come from an unsecured loan

Indirectly all unsecured loans outstanding finance the mortgage down payment. Money is fungible. Anybody that says that its okay to buy everything on credit card for the next 6 months, carry a balance, and then as a result have a lot more in savings but its not okay to just take out a balance transfer and drop it in your account are clearly missing something. If lenders actually cared about this they would actually just ban anybody from getting a mortgage even if they a small amount of unsecured debt.

I say this fully acknowledging the fact that you yourself would know that you are abusing the rule of the law, but its also almost impossible to prove when talking about the fungibility of money(and any law that isn't broken when you take advantage of the fungibility of money is stupid and should involve you doing that every time to get around it).


Agreed. That's why I got worried that my plan wouldn't work if they take all your liquid cash assets and subtract your unsecured debt. Which is what they should do if they truly wanted to cover their ass. But they also want to lend the money, cuz they make money on it too.

eferrari377 said:   Comit said:   Alternatively, if possible, buy it as an owner-occupied mortgage so you don't need as big a down (not to mention better interest rates). You have to live there for 6-12 months, depending on your lender, before you can rent it out, and you usually have to move in within 60 days of closing. EG I'm with penfed and I inquired if it it would be okay to move out and rent a year after a year and they told me that would be fine. Although you may run into resistant if you get more than one owner occupied mortgage with same lender. I wouldn't try to hide your intentions from the bank though. Speak up and ask them. You don't want to mess with mortgage fraud.

Already thought of that. I already own my own home and is much nicer than the rentals, so saying that I'm going to purchase a home and move into it that's 1/2 the value of my house doesn't make sense and the lender isn't stupid. I agree, don't want to mess with mortgage fraud.


It's only 6 months potentially, and a lot of $$$ savings on the line if you can do it. I wouldn't say it "doesn't make sense". There's plenty of reasons why people would downsize to a smaller home. Property tax reasons, rental opportunity, family crisis, or simply not wanting to live and take care of a big house. Not suggesting that you lie about it, just saying, the lender should be aware of the scenarios.

eferrari377 said:   dshibb said:   xoneinax said:   eferrari377 said:   I have read things online like "Borrowed funds may be used for the mortgage transaction provided the money comes from a secured loan other than a lien on the subject property, Unsecured loans are not acceptable." Are they only talking about if they blatantly see a deposit from my CC right before I close?You are contractually representing that the funds used for the mortgage transaction did not come from an unsecured loan

Indirectly all unsecured loans outstanding finance the mortgage down payment. Money is fungible. Anybody that says that its okay to buy everything on credit card for the next 6 months, carry a balance, and then as a result have a lot more in savings but its not okay to just take out a balance transfer and drop it in your account are clearly missing something. If lenders actually cared about this they would actually just ban anybody from getting a mortgage even if they a small amount of unsecured debt.

I say this fully acknowledging the fact that you yourself would know that you are abusing the rule of the law, but its also almost impossible to prove when talking about the fungibility of money(and any law that isn't broken when you take advantage of the fungibility of money is stupid and should involve you doing that every time to get around it).


Agreed. That's why I got worried that my plan wouldn't work if they take all your liquid cash assets and subtract your unsecured debt. Which is what they should do if they truly wanted to cover their ass. But they also want to lend the money, cuz they make money on it too.


In this area I don't really have an answer for you. Historically, I've always heard that maintaining large credit card balances while trying to get a mortgage is a huge ding to your ability to get the mortgage so most people just pay them down ahead of time. In your case you need the unsecured to comply with one of the terms so I can't really say as to what they'll do when they see that(either let it go, subtract it out or deny you outright I have no idea).

Comit said:   eferrari377 said:   Comit said:   Alternatively, if possible, buy it as an owner-occupied mortgage so you don't need as big a down (not to mention better interest rates). You have to live there for 6-12 months, depending on your lender, before you can rent it out, and you usually have to move in within 60 days of closing. EG I'm with penfed and I inquired if it it would be okay to move out and rent a year after a year and they told me that would be fine. Although you may run into resistant if you get more than one owner occupied mortgage with same lender. I wouldn't try to hide your intentions from the bank though. Speak up and ask them. You don't want to mess with mortgage fraud.

Already thought of that. I already own my own home and is much nicer than the rentals, so saying that I'm going to purchase a home and move into it that's 1/2 the value of my house doesn't make sense and the lender isn't stupid. I agree, don't want to mess with mortgage fraud.


It's only 6 months potentially, and a lot of $$$ savings on the line if you can do it. I wouldn't say it "doesn't make sense". There's plenty of reasons why people would downsize to a smaller home. Property tax reasons, rental opportunity, family crisis, or simply not wanting to live and take care of a big house. Not suggesting that you lie about it, just saying, the lender should be aware of the scenarios.


Oh, well I would never move out of my current house. I love my house, and my wife certainly wouldn't go for it. I know financially it would be smart to live in a small shack, but I'd rather just get creative with financing (which I'm hoping to do with CCs).

And once I run out of money on my CCs (well 30% of my total credit limit), I'm planning on getting investors to loan me money for the downpayment & reserves. But I'll likely be paying ~7%, which is way worse than 0% to the CC companies.

eferrari377 said:   Comit said:   eferrari377 said:   Comit said:   Alternatively, if possible, buy it as an owner-occupied mortgage so you don't need as big a down (not to mention better interest rates). You have to live there for 6-12 months, depending on your lender, before you can rent it out, and you usually have to move in within 60 days of closing. EG I'm with penfed and I inquired if it it would be okay to move out and rent a year after a year and they told me that would be fine. Although you may run into resistant if you get more than one owner occupied mortgage with same lender. I wouldn't try to hide your intentions from the bank though. Speak up and ask them. You don't want to mess with mortgage fraud.

Already thought of that. I already own my own home and is much nicer than the rentals, so saying that I'm going to purchase a home and move into it that's 1/2 the value of my house doesn't make sense and the lender isn't stupid. I agree, don't want to mess with mortgage fraud.


It's only 6 months potentially, and a lot of $$$ savings on the line if you can do it. I wouldn't say it "doesn't make sense". There's plenty of reasons why people would downsize to a smaller home. Property tax reasons, rental opportunity, family crisis, or simply not wanting to live and take care of a big house. Not suggesting that you lie about it, just saying, the lender should be aware of the scenarios.


Oh, well I would never move out of my current house. I love my house, and my wife certainly wouldn't go for it. I know financially it would be smart to live in a small shack, but I'd rather just get creative with financing (which I'm hoping to do with CCs).

And once I run out of money on my CCs (well 30% of my total credit limit), I'm planning on getting investors to loan me money for the downpayment & reserves. But I'll likely be paying ~7%, which is way worse than 0% to the CC companies.


Why not make it really kosher with the unsecured debt issue by having the unsecured debt taken out by one spouse and the other take out the mortgage?

dshibb said:   eferrari377 said:   Comit said:   eferrari377 said:   Comit said:   Alternatively, if possible, buy it as an owner-occupied mortgage so you don't need as big a down (not to mention better interest rates). You have to live there for 6-12 months, depending on your lender, before you can rent it out, and you usually have to move in within 60 days of closing. EG I'm with penfed and I inquired if it it would be okay to move out and rent a year after a year and they told me that would be fine. Although you may run into resistant if you get more than one owner occupied mortgage with same lender. I wouldn't try to hide your intentions from the bank though. Speak up and ask them. You don't want to mess with mortgage fraud.

Already thought of that. I already own my own home and is much nicer than the rentals, so saying that I'm going to purchase a home and move into it that's 1/2 the value of my house doesn't make sense and the lender isn't stupid. I agree, don't want to mess with mortgage fraud.


It's only 6 months potentially, and a lot of $$$ savings on the line if you can do it. I wouldn't say it "doesn't make sense". There's plenty of reasons why people would downsize to a smaller home. Property tax reasons, rental opportunity, family crisis, or simply not wanting to live and take care of a big house. Not suggesting that you lie about it, just saying, the lender should be aware of the scenarios.


Oh, well I would never move out of my current house. I love my house, and my wife certainly wouldn't go for it. I know financially it would be smart to live in a small shack, but I'd rather just get creative with financing (which I'm hoping to do with CCs).

And once I run out of money on my CCs (well 30% of my total credit limit), I'm planning on getting investors to loan me money for the downpayment & reserves. But I'll likely be paying ~7%, which is way worse than 0% to the CC companies.


Why not make it really kosher with the unsecured debt issue by having the unsecured debt taken out by one spouse and the other take out the mortgage?


We need both of our incomes to qualify for the loan (because of our home payment). Also, why would having a large CC payment affect or ability to get a loan, as long as the monthly payments are ok for our DTI?

eferrari377 said:   
...live in a small shack...


Ah, I see...slumlording it, eh? Good luck with your tenants.

eferrari377 said:   dshibb said:   eferrari377 said:   Comit said:   eferrari377 said:   Comit said:   Alternatively, if possible, buy it as an owner-occupied mortgage so you don't need as big a down (not to mention better interest rates). You have to live there for 6-12 months, depending on your lender, before you can rent it out, and you usually have to move in within 60 days of closing. EG I'm with penfed and I inquired if it it would be okay to move out and rent a year after a year and they told me that would be fine. Although you may run into resistant if you get more than one owner occupied mortgage with same lender. I wouldn't try to hide your intentions from the bank though. Speak up and ask them. You don't want to mess with mortgage fraud.

Already thought of that. I already own my own home and is much nicer than the rentals, so saying that I'm going to purchase a home and move into it that's 1/2 the value of my house doesn't make sense and the lender isn't stupid. I agree, don't want to mess with mortgage fraud.


It's only 6 months potentially, and a lot of $$$ savings on the line if you can do it. I wouldn't say it "doesn't make sense". There's plenty of reasons why people would downsize to a smaller home. Property tax reasons, rental opportunity, family crisis, or simply not wanting to live and take care of a big house. Not suggesting that you lie about it, just saying, the lender should be aware of the scenarios.


Oh, well I would never move out of my current house. I love my house, and my wife certainly wouldn't go for it. I know financially it would be smart to live in a small shack, but I'd rather just get creative with financing (which I'm hoping to do with CCs).

And once I run out of money on my CCs (well 30% of my total credit limit), I'm planning on getting investors to loan me money for the downpayment & reserves. But I'll likely be paying ~7%, which is way worse than 0% to the CC companies.


Why not make it really kosher with the unsecured debt issue by having the unsecured debt taken out by one spouse and the other take out the mortgage?


We need both of our incomes to qualify for the loan (because of our home payment). Also, why would having a large CC payment affect or ability to get a loan, as long as the monthly payments are ok for our DTI?


You should be able to post both incomes on the mortgage docs even if only one of you is actually signing for it. This is well established in the lending world as even your bank will tell you that all income in the household will count towards a mortgage even if only one of you is going to be on the loan. That is why its called 'household income'.

And I would agree I'm just pointing out that the vast majority of people pay off all their credit card debt before applying for a mortgage because they don't want it being a negative weight. So having credit card debt could be an issue not because of its affect on DTI, but maybe some assumption that if you actually had the income to pay for this new mortgage you would already have zeroed out that unsecured debt and the fact that you haven't is a red flag in regards to your ability to pay. This is just a guess though.

Comit said:   eferrari377 said:   
...live in a small shack...


Ah, I see...slumlording it, eh? Good luck with your tenants.


I wasn't refering to living in the future rental as a shack. I was just saying that financially, living in a small shack or even a appartment would be best. But I'm unwilling to do that.

I wouldn't consider a 1,500 sq. ft. 4/2 house in a nice neighborhood slum lording it! I would certainly live there if we weren't fortunate enough to live in the house we have.

dshibb said:   eferrari377 said:   dshibb said:   eferrari377 said:   Comit said:   eferrari377 said:   Comit said:   Alternatively, if possible, buy it as an owner-occupied mortgage so you don't need as big a down (not to mention better interest rates). You have to live there for 6-12 months, depending on your lender, before you can rent it out, and you usually have to move in within 60 days of closing. EG I'm with penfed and I inquired if it it would be okay to move out and rent a year after a year and they told me that would be fine. Although you may run into resistant if you get more than one owner occupied mortgage with same lender. I wouldn't try to hide your intentions from the bank though. Speak up and ask them. You don't want to mess with mortgage fraud.

Already thought of that. I already own my own home and is much nicer than the rentals, so saying that I'm going to purchase a home and move into it that's 1/2 the value of my house doesn't make sense and the lender isn't stupid. I agree, don't want to mess with mortgage fraud.


It's only 6 months potentially, and a lot of $$$ savings on the line if you can do it. I wouldn't say it "doesn't make sense". There's plenty of reasons why people would downsize to a smaller home. Property tax reasons, rental opportunity, family crisis, or simply not wanting to live and take care of a big house. Not suggesting that you lie about it, just saying, the lender should be aware of the scenarios.


Oh, well I would never move out of my current house. I love my house, and my wife certainly wouldn't go for it. I know financially it would be smart to live in a small shack, but I'd rather just get creative with financing (which I'm hoping to do with CCs).

And once I run out of money on my CCs (well 30% of my total credit limit), I'm planning on getting investors to loan me money for the downpayment & reserves. But I'll likely be paying ~7%, which is way worse than 0% to the CC companies.


Why not make it really kosher with the unsecured debt issue by having the unsecured debt taken out by one spouse and the other take out the mortgage?


We need both of our incomes to qualify for the loan (because of our home payment). Also, why would having a large CC payment affect or ability to get a loan, as long as the monthly payments are ok for our DTI?


You should be able to post both incomes on the mortgage docs even if only one of you is actually signing for it. This is well established in the lending world as even your bank will tell you that all income in the household will count towards a mortgage even if only one of you is going to be on the loan. That is why its called 'household income'.

And I would agree I'm just pointing out that the vast majority of people pay off all their credit card debt before applying for a mortgage because they don't want it being a negative weight. So having credit card debt could be an issue not because of its affect on DTI, but maybe some assumption that if you actually had the income to pay for this new mortgage you would already have zeroed out that unsecured debt and the fact that you haven't is a red flag in regards to your ability to pay. This is just a guess though.


Hmmm, that doesn't sound right but I'll check it out. I'm pretty sure that they'd need to check my wife's credit if we wanted to use her income. I can look into it though. Wouldn't they want her on the hook for the payment too if I lose my job, etc?

eferrari377 said:   dshibb said:   eferrari377 said:   dshibb said:   eferrari377 said:   Comit said:   eferrari377 said:   Comit said:   Alternatively, if possible, buy it as an owner-occupied mortgage so you don't need as big a down (not to mention better interest rates). You have to live there for 6-12 months, depending on your lender, before you can rent it out, and you usually have to move in within 60 days of closing. EG I'm with penfed and I inquired if it it would be okay to move out and rent a year after a year and they told me that would be fine. Although you may run into resistant if you get more than one owner occupied mortgage with same lender. I wouldn't try to hide your intentions from the bank though. Speak up and ask them. You don't want to mess with mortgage fraud.

Already thought of that. I already own my own home and is much nicer than the rentals, so saying that I'm going to purchase a home and move into it that's 1/2 the value of my house doesn't make sense and the lender isn't stupid. I agree, don't want to mess with mortgage fraud.


It's only 6 months potentially, and a lot of $$$ savings on the line if you can do it. I wouldn't say it "doesn't make sense". There's plenty of reasons why people would downsize to a smaller home. Property tax reasons, rental opportunity, family crisis, or simply not wanting to live and take care of a big house. Not suggesting that you lie about it, just saying, the lender should be aware of the scenarios.


Oh, well I would never move out of my current house. I love my house, and my wife certainly wouldn't go for it. I know financially it would be smart to live in a small shack, but I'd rather just get creative with financing (which I'm hoping to do with CCs).

And once I run out of money on my CCs (well 30% of my total credit limit), I'm planning on getting investors to loan me money for the downpayment & reserves. But I'll likely be paying ~7%, which is way worse than 0% to the CC companies.


Why not make it really kosher with the unsecured debt issue by having the unsecured debt taken out by one spouse and the other take out the mortgage?


We need both of our incomes to qualify for the loan (because of our home payment). Also, why would having a large CC payment affect or ability to get a loan, as long as the monthly payments are ok for our DTI?


You should be able to post both incomes on the mortgage docs even if only one of you is actually signing for it. This is well established in the lending world as even your bank will tell you that all income in the household will count towards a mortgage even if only one of you is going to be on the loan. That is why its called 'household income'.

And I would agree I'm just pointing out that the vast majority of people pay off all their credit card debt before applying for a mortgage because they don't want it being a negative weight. So having credit card debt could be an issue not because of its affect on DTI, but maybe some assumption that if you actually had the income to pay for this new mortgage you would already have zeroed out that unsecured debt and the fact that you haven't is a red flag in regards to your ability to pay. This is just a guess though.


Hmmm, that doesn't sound right but I'll check it out. I'm pretty sure that they'd need to check my wife's credit if we wanted to use her income. I can look into it though. Wouldn't they want her on the hook for the payment too if I lose my job, etc?


Of course they would prefer to have her on it what lender wouldn't want more people on the hook guaranteeing the debt? The question is what is legal to answer when supplying your income on a loan doc. The answer is well established its 'household income' unless specifically stated otherwise. Household income is the amount of income your household produces in total even if you the borrower is only a part of it. And when you provide the tax returns to verify the amount of income it will correspond to the amount you posted on your loan docs and there wont be anymore issues that will come up.

I just looked at the "Uniform Residential Loan App" and it don't say anything about Household income. They ask for the "Borrower" and "Co-Borrower" Base Emp. Income.

eferrari377 said:   I just looked at the "Uniform Residential Loan App" and it don't say anything about Household income. They ask for the "Borrower" and "Co-Borrower" Base Emp. Income.

Ask the bank if you can put household income there. Most will say yes as long as you can prove it.

Buy a house for 100k(or 50k) and pay cash instead of dealing with this mess?

dshibb said:   eferrari377 said:   I just looked at the "Uniform Residential Loan App" and it don't say anything about Household income. They ask for the "Borrower" and "Co-Borrower" Base Emp. Income.

Ask the bank if you can put household income there. Most will say yes as long as you can prove it.


Something to consider. That's interesting. Thanks for the suggestion.

PatrickM213 said:   Buy a house for 100k(or 50k) and pay cash instead of dealing with this mess?

Now why would I do that? Getting creative with money is how you get rich. I would think that members of FatWallet would be the crowd to appreciate getting creative to find a good deal.

Why would I buy a $50k house when I can use "other peoples" money and borrow it from CC or banks for 4% or less for 30yrs? Sounds like a no brainer to me! And the property cash flows from day 1...

I'm not seeing the whole in my plan, other than a little bit of THINKING ahead of time.

You want creative ?
Borrow the full $325k from your cc , buy the property, and when the zero percent is over , settle them for 15-36 cents in the dollar

The answer is no

Lenders are legally required to verify the source of the funds being used to make a down payment on a house. You hit it right on the head when you said this. An unsecured credit card is not acceptable, however if you have a HELOC, or a car, then you are able to borrow against it, but it must be secured.

Ask your lender these questions. They want you to make the loan just as bad as you do because they get nothing if the loan doesn't go through.
eferrari377 said:   So it should be ok?

I have read things online like "Borrowed funds may be used for the mortgage transaction provided the money comes from a secured loan other than a lien on the subject property, Unsecured loans are not acceptable."

Are they only talking about if they blatantly see a deposit from my CC right before I close? But as long as the money from the CC is vetted, and paid properly for the past 2 months, it's ok?

Sorry OP apparently a new regulation has succeeded in killing the Household Income loophole:

Regulation Z said:
iii. Household income and assets. Consideration of information regarding a consumer’s household income does not by itself satisfy the requirement in § 226.51(a) to consider the consumer’s independent ability to pay. For example, if a card issuer requests on its application forms that applicants provide their ‘‘household income,’’ the card issuer may not rely solely on the information provided by applicants to satisfy the requirements of § 226.51(a). Instead, the card issuer would need to obtain additional information about an applicant’s independent income (such as by contacting the applicant). However, if a card issuer requests on its application forms that applicants provide their income without reference to household income (such as by requesting ‘‘income’’ or ‘‘salary’’), the card issuer may rely on the information provided by applicants to satisfy the requirements of § 226.51(a).


I just came across this and even though this applies to credit cards I'm sure it applies to mortgages now as well.

SUCKISSTAPLES said:   You want creative ?
Borrow the full $325k from your cc , buy the property, and when the zero percent is over , settle them for 15-36 cents in the dollar


Now that would be creative, but a little too immoral for me, and you wanna talk about tanking my FICO score! I'd like to continue to purchase properties in the future

Table83 said:   The answer is no

Lenders are legally required to verify the source of the funds being used to make a down payment on a house. You hit it right on the head when you said this. An unsecured credit card is not acceptable, however if you have a HELOC, or a car, then you are able to borrow against it, but it must be secured.

Ask your lender these questions. They want you to make the loan just as bad as you do because they get nothing if the loan doesn't go through.
eferrari377 said:   So it should be ok?

I have read things online like "Borrowed funds may be used for the mortgage transaction provided the money comes from a secured loan other than a lien on the subject property, Unsecured loans are not acceptable."

Are they only talking about if they blatantly see a deposit from my CC right before I close? But as long as the money from the CC is vetted, and paid properly for the past 2 months, it's ok?


But as long as the money is vetted and in my bank account for over 2 months, how do they know that the money is being used for downpayment? How do they verify the source of the funds? I thought as long as it's over 2 months it doesn't matter where it comes from, as long as it shows up on your credit report (so they can atleast factor into your DTI ratio).

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