My question involves a mortgage in the state of: NY
I own an apt in nyc and rent it out in a 24 unit condo building. 6% interest rate on 30yr fixed. I have 40-50% equity in it. Credit score 800. Freddie Mac owned.
1. I tried refinancing the apartment through various lenders, but was told I did not qualify because of the following:
- 5 out of 24 (21%) owned by one entity which is greater than 10%
- 10 owner occupied, 14 rentals = 42% rentals which is less than required 51%
- 2 owners have payment delinquencies
Any suggestions on getting this unit refinanced?
2. I tried to get pre-approved for a new mortgage after seeing an apartment that I liked in NYC. On paper, I can afford it. But after I sent the lender my income tax returns and schedule E (2011 2012), they thought otherwise. I was told that my DTI (debt to income) ratio with the last two years averaged is 59% and the maximum we can go up to with an exception is 50%. Usually it is 40%. In 2011 I had a large loss from rental income because the apt was vacant for 1/2 a year. Is it necessary for lenders to look at last 2 years of tax statements? I was also told the following:
"Fannie and Freddie require rental income to be calculated. We take your net
rental income figure and add back 4 deductions: Insurance, Mortgage
Interest, Taxes and Depreciation. The sum of that number is the income
amount we can qualify you with."
And right now they said that sum is too low. Even if I reapplied in 2013 with full rental income, I think I may still have issues. But doesn't equity, credit score, etc play a role? And how does "relocating" and "commuting distance" affect this process too?
Right now, the only options I have been told I have are to sell the rental apartment or sit on it with its 6% interest rate. Please help. Thanks!