I am trying to refinance my home mortgage with Loan Depot and need to use my royalties as one of my income streams. But the mortgage company wants some form of document that will verify that royalty paments will continue for three years. Has anyone else had to deal with this? What did you do??
You could get a reserve report from an engineer. That will give you projections by year for the remaining life of the well(s). Nothing lasts forever, and that might be valuable information for you to have for a variety of reasons.
Of course, that will only project the oil and gas volumes to be produced. Your actual revenue will also depend on the future prices of oil and gas, which no one can predict. For that reason, most banks will take a very conservative approach towards lending on oil and gas production.
I would not use minerals as a form of getting a Mortgage. If you can't get the loan without it, then you probably shouldn't be buying the property. Oil and Gas comes and goes. When the well comes in it maybe in the 5 digit figure, but within a year it maybe down to a few hundred.
Diana, when I refied they wouldn't count my royalty income. We got it based on my wife's employment and my social security.
Thanks All. I didn't really expect them to use it, but once they saw it was there, they were trying to find a way. I just need them to let go and work with what they have. Thanks for the feedback.
You have to see your mineral rights like stocks. They go up and down and they are not consistent. I am currently in the middle of trying to refinance my home and the agent ask me the same thing. Luckily, I am able to prove I have other income besides the royalty payments. Hope this helps you.