House Mortgage Loan

Any landlords borrow mortgages recently? It seems lenders have tightened the rules. Now expenses for rentals have to include depreciation. We landlords like to adjust expenses such that we have zero net income (defer income tax) and net positive cash flows. Hence if we overadjusted net income to be negative, it becomes a liability in computing DTI.

Any different experience?

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I didn’t have that this summer. Is it a freddie/fannie conforming or a private lender?

Big banks like WFC, BAC, Chase and Citi. In Cupertino and in Austin.
Both conforming and jumbo. Jumbo has cheaper rates, 0.5% lower than conforming similar to what ptieman’s experience with commercial loan. For both new purchases and re-financing (subscribed to ptieman’s thinking of borrowing while you can at current high valuation).

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Depreciation should be added back to your rental income. Do you have an inexperienced loan officer?

If you are tired of inexperienced people, just sell some aapl and buy with cash.

Read my response to marcus. All banks, both jumbo & conforming, new and re-financing. So many loan officers. All new? Wrong, some are 20-30 years in the business.

Any written proof? I am not aware of any changes from Fannie and Freddie.

If what you said is true, it means that majority of investors would be shut out of the mortgage market. I think that’s highly unlikely.

You want me to send you my assets privately or open to all in this forum?
Don’t tell me the implication. I want to know whether you borrow recently and what is your experience.

Not your asset (though it is ok of course :rofl:).

We need a written proof that mortgage lenders do not add back your depreciation to your net rental income.

They first deduct depreciation as an expense but will add back in the end. I am 99.999% certain on this.

Can they count your aapl dividend as income?

Yes.

Double check with the underwriter. She should add back your depreciation to your net income income. If she rejects, talk to her supervisor and show her your aapl shares :rofl:

I would be surprised if depreciation is not added back into your income.

One reason is that the amount of depreciation that you take, is kind of random. You could say your land is worth 990k and the structure is worth 10k, or you could say 500k each. Or, if you want to be more aggressive, assign 300k to the land and 700k to the structure.

Even more bizarre, if you have spent money on the property e.g. a new roof, then this would increase your depreciation taken. So, on paper, your taxable income goes down, while in reality, the roof is paid for and you will have one less expense for the next 15+ years.

Personally, I like to get loans that look at the property similar as for a commercial loan. In other words the property qualifies the loan, not my personal income or DTI.

None my recent loans have been Fannie Mae/ Freddie Mac… last one was 2014 for a SFR in Cupertino.

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Rates have been coming down.

What on earth is the government doing making FHA rates lower than conforming? Those loans are by definition riskier.

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These rates are too high. Check with Bank of America or Wellsfargo.

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Check this out. Jumbo 30 year is quoted at 4.0. If you have deposits with them it goes lower.

https://www.wellsfargo.com/mortgage/rates/

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I was helping my cousin get a loan at Chase and they ask us to prove that the property was free and clear.
I thought that was pretty funny that a lender would ask the borrower for title information on the property they are making a loan on.
And to prove that there was not a loan on the property.
I learned a long time ago that banks do not make any sense, if you want to deal with them you just have to do what ever they say no matter how stupid it is.
If you can some how make them think they are smart in the process then you get brownie points too.

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If your cousin is the current owner and need a mortgage for refinance, it makes sense for the bank to ask for proof