Asked by Dee  |  Submitted August 26, 2015

I need new roof & a newer car ASAP. My income is good, but I can't get a loan because I have three houses with mortgages. All are paid on time.

Two of the houses I lease. I am self employed x 10 yrs. I have lines of personal credit but I could not get a business line. Right now I plan to use one of my annuities to pay for the car and roof, but wanted to see if I had any other options.

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  Answers  |  2

September 16, 2015

Hi, Dee,
You mention you can't get a loan because you have three homes with mortgages. I presume you mean your debt to income ratios are too high, given the three loans versus your self employment income? Have you had a lender look at your income docs to see what self employment deductions might be added back to your income (such as rental home interest paid, business mileage deductions, depreciation, etc)? It's certainly more challenging that it was 10 years ago for self employed borrowers to obtain mortgages, but I write loans for folks like yourself all the time, it's just a matter of making sure the income is calculated correctly. As far as the roof is concerned, if it's damaged/leaking, and on the home you want to refinance, that's an issue, If it's just nearing the end of its usable life but still intact, its certainly not as big a concern. At any rate, if you haven't had a lender do a detailed analysis of your income and debt ratios, that's the place to start. Hope this helps, let me know if you have further questions. I write loans nationally, always glad to help.

$commenter.renderDisplayableName() | 11.29.20 @ 12:41


March 27, 2016

Hi Dee,

I'm a bit confused. you say you have "good" income? Why do you need a loan to buy a car and put a new roof on?

I'm going out on a limb here to say that your income may not be good. You need more money in your owners equity pocket. (i.e, greater net cash flow.)

What is the value of the Annuity? If you are "borrowing" from this, the debt financing may be part of the problem?

There are several ways to generate income:
1). Increase the house lease payments to cover the costs
2.. Refinance the exiting mortgages for a lower rate or do a cash out REFI
3. Sell the house that is generating the smallest nFCf or lowest profit margin and invest the proceeds into a higher yielding Investment (we have several that generate over 10% CAGR)
4. Increase your ROI

Many folks are house rich and cash poor.
The main takeaway here is to give yourself a margin of safety and an emergency fund in addition to keeping your income above your expenses.

Keep in mind that servicing the debt (paying the interest) needs to be added to the debt itself.

Feel free to contact me to discuss further.

It's not what you make, It's what you keep that determines your lifestyle

$commenter.renderDisplayableName() | 11.29.20 @ 12:41