Mortgage qualification

[imam]

An investor has one rental property with Balance mortgage $203,000 with Mortgage company X . FMV approx $330,000 equity 38% and mortgage term ends Feb2012. Interest rate fixed 4.95%



He owned house Bal mortgage $232,000 with mortgage company Y. FMV approx. $410,000 equity 43% Mortgage term ends July 2012. Interest rate variable 2.1%. Heloc 100,000. $50,000 used.



He purchase another property from builder $ 346,000 closing in dec,2011. Paid $20,000 to builder. He need to pay 20% down and closing cost approx. $56,000. Interest rate asked variable. He has pre-approval

from mortgage company X.



Monthly house hold income : Avg $7625 based on 2 years NOA. TDS is 38%(less than 40%), GDS is 41% (Required 32%) Credit score A ( 750)



He has credit card debt payments $300 per month( Low interest rates 0.99%,2.99%). Total debt approx. $80,000 . He has approx. $98,000 in RRSP. He also looking for selfdirected RRSP for 13-14% gain



Questions: 1. Though pre-approved by company X, can lender qualify new mortgage for 3rd property based on above situation with high GDS.

2. Should the investor refinanced rental property to consolidate debt using other mortgage company or sell the property.

3. Should the investor keep all 3 properties to avoid capital gain tax

 

[RobMacdonald]

Hi,



There is simply not enough information here to provide a good response, and that's probably why you've received no responses. I'm not sure how you calculated the GDS and TDS, as every lender has a different what of calculating rental income and ratios, so your GDS and TDS will be different with every lender.



Based on the information you've given, I suspect the investor would have some options.



1. yes, if you have a pre-approval with a lender, you can shop the market for other options.

2. Not enough information about long term goals and plans to answer the question

3. Not sure what you mean here. Capital gains tax only applies if you sell a property.



If you are in the Lower Mainland, I'd be happy to meet up to go through options.