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Rakhi Vasavada
Rakhi Vasavada , Financial and Legal Consultant
Category: Finance
Satisfied Customers: 4419
Experience:  Graduated in law with Emphasis on Finance and have have been working in financial sector for over 12 Years
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I own a company and have a supplement income. I own low income

Resolved Question:

I own a company and have a supplement income. I own low income rental properties and I am the guarantor for my company's low income rental loans. The rentals are considered losses on my tax returns.

My company had a bad year last year which does not look well on my tax return.

I had three tax liens that I paid off earlier this year.

My credit rating is good. All of my payments are on time.


About three years ago, I applied for a loan to buy a home for myself and my wife. I asked the bank over the phone for a letter of approval. The bank sent the letter without questions.


Now I am applying to be a cosigner on a home loan for a relative who moved near me from out of state. I am told by a mortgage broker that there is a 50% chance of being approved as the cosigner. I am having trouble understanding the reason why.


Can you help me to understand this?


Thanks
Submitted: 2 years ago.
Category: Finance
Expert:  Rakhi Vasavada replied 2 years ago.

Rakhi Vasavada :

Dear Friend,

Hello and welcome. Thank you for providing us opportunity to assist you.

Rakhi Vasavada :

Primarily, there can be no counter effect of having a co-signor. If a applicant brings a co-signor along with his application, it actually fortifies and strengthens its application. However, as you are aware, you would be on the title and jointly responsible for the debt.

The bank would disallow you being a co-signor only if it finds your debt equity ratio too skewed. If you have lot of debts outstanding as against you income, your income may not be enough to have you co-sign some more debt. This can be the only reason and I just see no other reason for the same.

Rakhi Vasavada :

I am more than sure this would help. You may please leave a positive rating if this helped as this is the only way we are compensated for helping you. Alternatively, please feel absolutely free to revert back with a reply if you need further assistance.

Warm Regards,

Customer: replied 2 years ago.

Thank you for your answer.


 


How does the bank determine "a lot of debts against my income"?


 


 


 


 


 


 

Expert:  Rakhi Vasavada replied 2 years ago.
Dear Friend,

Hello and welcome. Thank you for your follow up reply.

By quantum of debt, I mean "Debt Equity Ratio". That is the amount of debt you can comfortably service with your current income.

To explain in simple words, the lenders will not be comfortable with debt of $60-65 with $100 of income.

If you already have this much debt, the lender may or may not approve you for a fresh debt when you are co-signing a loan.

I am more than sure this would help. You may please leave a positive rating if this helped as this is the only way we are compensated for helping you. Alternatively, please feel absolutely free to revert back with a reply if you need further assistance.

Warm Regards
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