Hi, I'm new to this forum. I will try to give info and get my question out there.
Current Situation: Family of 4, 2 kids. Own home with about $30k of equity (7 years owned) all on-time payments. FHA financed at 6.1% and only $50/month PMI. $1,100.00 monthly payment includes all escrow taxes, homeowner's ins. and PMI.
We've outgrown our starer home we bought in 2006. Just too small (2 bed). We want to double square footage, from 1000 to 2000. Had a BK/Ch.7 but kept house and car, and all on time payments. FICO is rising to 695+. Told I need 715 for conventional.
We've looked for a year and literally can't find a good deal. Any house we'd like seems inflated or too far in the sticks due to too little housing on the market here. Market is stagnant.
Our area has very little we'd want to move into on the still bubbled and little retail local real estate market. Prices still seem too high, read no opportunity for sweat equity. There are NO MORE FORECLOSURES happening now to flip. So that's peetered out. The only option is to find something that would work and low ball offers. No realtor will help me to do that. What's more is FHA is so high with PMI now that the low APRs are worthless. The final payouts with PMI on the last pre-auth estimate was a $500/month just in PMI, and with my current $50, I don't want that with the new rules of FHA that make you pay the PMI even when you reach 80% LTV. Since prices are so high still here, there will not come that day for the foreseeable future.
We found a potential oportunity, and I just don't know if it's the right time to pursue a CONSTRUCTION to PERMANENT loan yet. It's in the USDA area, and since husband is just now applying for new career and potential job in the works, my income qualifies us ($60k) for now. Won't after he gets hired, which could happen in couple months before he graduates.
Found an awesome 3-car garage, finished except siding. It has a 700 square foot almost finished/unfinished apartment above. If I can get us a new USDA Construction to Permanent loan with low down, husband can finish apartment for us to live, sell our home and tap our equity, and use the loan draws to complete the home. Home has foundation, septic, and other utilities to site. Needs private well.
I know most will say "IMPOSSIBLE" but I read that USDA has enacted this type of financing as of last month: source: http://www.usda.gov/wps/portal/usda/usdahome?contentid=2013/12/0233.xml&contentidonly=true
My question is, we meet all USDA guaranteed guidelines but I'm afraid the newness of the above program will take time to become familiar to lenders. Also, I'm worried the total cost of the property to finish $280,000 if we don't have to hire a general contractor, would be above a USDA "modest" limit. Also, my realtor is not sure any lenders will allow borrowers to act as their own general contractor anymore.
If my calculations are correct, and if I can find a lender to help me obtain a USDA guaranteed Const to Perm Mortgage, we could earn $100k in sweat equity on this deal and fast track the build, having it done in less than 6 months. We are trying to rebuild our net worth after losing our construction small business. Why not!?
Well, I don't know even where to begin because this USDA contruction to perm mortgage is an entirely new product. My own Credit Union (WSECU) says they won't be doing USDA for 6 months. I don't know who to trust or where to look? Banner Bank, my realtor says. Any Ideas?
Maybe it's too new to use yet, and maybe the home I want is not USDA modest enough. Is Modest due to square footage, 3 bay garage, view issues or total price?
Any ideas are welcome. Thanks! We don't have enough saved for 20% down. I was told only FHA with our credit (Ch.7 in 2010). We will be 4 years post BK/Ch.7 in July. Was told in 2013 to wait until July, 2015 for conventional. But USDA was off the table in that conversation.
BTW the seller is willing to carry the contract for 3 years while I seek financing but I am totally scared that will never happen in our best interest and I won't tie myself up with a deal like that ever. I need to either have the financing to finish the property or I will go back to desperately looking through our housing market for other deals in our area of finished homes.
Thanks!
