04-08-2012 04:17 PM
04-08-2012 05:15 PM - edited 04-08-2012 05:19 PM
We would like to buy a home. We are 18 months out of a short sale and 6 months out of a chapter 7. Our credit score is 680 and have 0 debt and no monthly payments. Our combined yearly income is 150k. Will put 20% down on a purchase price of roughly 350k. Can we get preapproved?
Short answer: No, not for a FHA or a conventional or VA or USDA loan. Each one of those types of loans have differing lengths of waiting time they require for BK and short sale derogatories. In other words, you can get an FHA loan if you are 2 yrs post BK and 3 yrs post short sale. But conventional requires 2 yrs from the short sale date and 2 yrs from the BK discharge date (not filing date) if you have mitigating circumstances for your BK; otherwise it is 4 yrs from the BK.
However, you can qualify for a private loan with more down. Generally the private lenders look for 35% down or more and have a high rate of interest with a balloon. OR, if you find a seller that owns their home free & clear and they are willing to hold a mortgage, you can structure a seller held mortgage.
There is another way, but it is generally for investment properties. You can set up a self-directed IRA and get a loan without personally qualifying for it thru the SD IRA. The down payment requirements range from 25% down to 50% down. It is essentially a collateral loan too (like the hard money loans) but is in a lower interest rate range than the collateral loans.
04-09-2012 06:35 AM - edited 04-09-2012 06:37 AM
How high would the rates be? Really looking to buy now as our lease is up this summer. I ca always refinance a couple years dowm the road right?
The loans are from private lenders. The rate is extremely high and the downpayment is min 25% (some have a min of 35% down). On the one's I've seen recently the rate is anywhere from 10% to 15% interest only with a balloon due in 3 yrs. (at the most). There is a 6 month pre-payment penalty. Most importantly, the property has to be an investment property, not a primary residence.
If you obtain seller financing, it is up to you and the seller to determine your own terms. Seller's are much more reasonable. The rates are similar to market rates, just a little above (instead of 4% the rate might be 5% or 6%). The entire terms of the deal is negotiated between you and the seller. This is the only way I know of to finance a primary residence with the current derogatories you listed. However, very few sellers have the option to even consider holding the note as they don't own their property free and clear.
Another option is a contract for deed. Again, not many sellers will do this method and you need an attorney to write up the deal.
You might consider just spending the next year or so getting your down payment beefed up and your credit re-established so you can get a third party loan like FHA.
04-15-2012 07:02 AM
I just wanted to clear one point up, the seller does not have to own the home free and clear, you can wrap the existing mortgage. For example: The Purchase Price is 300,000, the seller owes 125,000 at 6 %. You could offer 20% down, or $60,000 and have the seller carry a note for $240,000. You could settle on a rate of say 5%. He is short on the 125,000 but might still consider it if he really wants to sell. Without calulating it out, his effective return would be somewhere around 4.5%.
But, he has sold his home!
Seller financing will not last long, as the market improves it slips away. So the sooner the better depending on where you live.
05-22-2012 03:59 AM
Hi, I understand that questions, Ive been racking my brain trying to figure out how ..
Well i have one answer, we are 8 months out of our short sale.
which took forever. actually we are suspose to wait 2 years is what they say the rule is.
Except if you go to a credit union. they have a program right now since they dont answer to anyone short story i got my S#*# together and wrote out my hardship letter we have repaird our credit and my score is 675 depending which bureau you pull my husbands is tiny bit over 700
So anyway its not the best loan but under the circumstances it will do the program is 20 year loan 5.75 @ plus taxes and ins
Seller can play closing costs
Also im still looking myself, but i have read that if you have a good reason it happend and your hardship leter can back you up and it says you dont have a waiting period.
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