US Underwriters & UK mortgage
 

Hi

Need some quick advice - we are buying a property and going through underwriting at the moment. Our loan officer has just sent us this question, from the underwriters:

“They need you to document if the mortgage in the UK is paid off. If so, they need a copy of the settlement statement showing when the home sold. If there is a balance on that home then you need to prove if the home is escrowed with copy of insurance and taxes for the home. “

Now, I have a property in the UK, which is mortgaged and I rent it out, and the tenants rent covers the mortgage, and other items like the insurance - I declare this rental income in the USA, as I am supposed to do.

Does anyone have any idea what I should give them in response to this, given that nothing is paid into an escrow account? Property insurance is paid directly, and tenants pay local taxes, not me.

Re: US Underwriters & UK mortgage
 

I suspect that may just be the start of your problems with underwriters when you have rental property. They'll likely not give you full credit for the amount paid by the renters since they could stop making rental, local taxes, and hazard insurance payments and when they move out, you may not be able to rental it out immediately.

Without an escrow account, they'll likely reduce the credit even more. If your income is good enough to not need as much credit as possible, then you should be fine.

Re: US Underwriters & UK mortgage
 

In the first instance, give them an explanation as they clearly know nothing about mortgages and property-related taxes in the UK. Trying to finagle a simple answer, that fits with the underwriter's (lack of) understanding of how things work in the UK is only likely to get you in to trouble. ..... Part of your explanation might include how much is in your "float" account in the UK that would (hopefully :unsure:) show you have the liquidity to make mortgage payments for x months if the tenant left.

Re: US Underwriters & UK mortgage
 

Float account?? Haha! No, doesn't apply! Although my tenants are signed up until next March, so maybe providing proof of the lease will be enough.

Anyway, for now, they have been sent confirmation of my mortgage, insurance and a 'brief' letter explaining why I don't pay property taxes! My loan officer has said this should be fine, but we'll see!

Re: US Underwriters & UK mortgage
 

Just to update - mortgage got final approval after showing them UK statements with all the last years worth of mortgage payments on them! Fingers crossed for a smooth ride to settlement now! :)