My wife recently applied for a car loan with the credit union we currently deal with (12k). We have 3 rental doors to our credit at this time. She has a full time job and I have been self employed for less than a year, I still had to sign the application to help with the debt servicing ratio's. We both have excellent credit scores and over 300k of equity in our homes.
She was denied the loan, no offer of a secured LOC or otherwise, just a flat out no. When I got on the phone with the loan manager as to why she was denied, he told me it is because we rent to a family member and his rent cannot be included in their rental calculator. This has never been a problem before. I said to him, that didn't seem to be an issue when you gave us a new mortgage 3 months ago. He said if he would have known that, we would not have gotten the mortgage and then implied that we tried to pull a fast one. At this point I throw my hands in the air and start swearing profusely under my breath. Our mortgage broker was well aware that we rented to our son. Perhaps she failed to share that little tidbit of info.
If their underwriters had any clue as to rental market rates, they would have seen that he is clearly underpaying by about 25%. My point is that we were honest in filling out the application. We could have easily fudged the numbers but we did not. We have very good credit, lots of equity, full legal suites and we declare all our rental income yet its not good enough for a 12k loan.
This ordeal has made me feel that I have to lie in order to move forward and I don't want to do that. Perhaps someone else out there has had a similar experience with renting to family and could share their thoughts. I already know I will be looking for a new lender when my term comes due.
She was denied the loan, no offer of a secured LOC or otherwise, just a flat out no. When I got on the phone with the loan manager as to why she was denied, he told me it is because we rent to a family member and his rent cannot be included in their rental calculator. This has never been a problem before. I said to him, that didn't seem to be an issue when you gave us a new mortgage 3 months ago. He said if he would have known that, we would not have gotten the mortgage and then implied that we tried to pull a fast one. At this point I throw my hands in the air and start swearing profusely under my breath. Our mortgage broker was well aware that we rented to our son. Perhaps she failed to share that little tidbit of info.
If their underwriters had any clue as to rental market rates, they would have seen that he is clearly underpaying by about 25%. My point is that we were honest in filling out the application. We could have easily fudged the numbers but we did not. We have very good credit, lots of equity, full legal suites and we declare all our rental income yet its not good enough for a 12k loan.
This ordeal has made me feel that I have to lie in order to move forward and I don't want to do that. Perhaps someone else out there has had a similar experience with renting to family and could share their thoughts. I already know I will be looking for a new lender when my term comes due.
