How can married borrowers maximize leverage as real estate investors. Good stuff by Chad Emerson.
Transcript: Hi, this is Chad Emerson with Guild Mortgage. And today, I am going to talk about maximizing your leverage between married borrowers. There is a current rule right now that says the maximum number of financed properties that an individual can obtain is ten. However, the key word to take from this is individual. The rule is you don’t combine the number of properties that a married couple owns together, it’s how many they have individually. So, if you are one of those lucky couples where you both work, you both have an income stream, you both have qualifying income and assets, then it is conceivably possible that you can obtain, between the two of you, up to twenty properties. Now, this has to make sure that you can qualify on your own without your spouse’s help. Now, if this is still possible, there are some pitfalls to look out for. The biggest pitfall that we run into often times is gifting funds. Even if it’s between married couple, you cannot gift funds to your spouse per the Fannie Mae rules. A gift is not allowed in an investment purchase. That is if you have joint accounts, you don’t have to worry about this. You can simply get an access letter from your spouse that says, “They have complete and full access to the funds in the account and can use those for the purchase of investment property.” However, if it’s a situation where you don’t have joint accounts or let’s say it’s a retirement account that your spouse is on but they can’t add you on, and you need those funds to purchase the property. You can get around this gift issue. The way to do this is to make sure that you get these funds deposited in your account and then you wait, and let them season there for 30 days. The reason why this is important is lenders are only going to go back 30 days to verify any large deposits in an account. For example, let’s say you have the funds deposited in the account today, wait 31 days, get a 30 day statement showing the funds in your account, and it won’t show the large deposit. Now one other thing you may want to look at is how many properties is your spouse on the note or on the deed. There are certain circumstances where you spouse maybe on the deed of the property but they are not on the note. If that’s the case, you can actually quit claim off that deed, and now you have room to purchase another property. So, I hope this was useful for you. And if you have any questions, call me anytime. This is Chad Emerson with Guild Mortgage.