@Anonymous wrote:
I have a middle credit score around 600 and am in need of financing a home around $700,000. I currently have a home under FHA with a very low mortgage payment of 1900 which includes taxes and insurance. I have two relatives who cover the mortgage on that property; however I would love to keep it and purchase the new house. But if I need to sell it to qualify then that is no problem except that it is a slow market. My salary is in the high 100's so salary is not an issue. My credit is low due to a slow recovery. Any recommendations????
FHA has some guidelines that one needs to adhere to when buying a new primary residence if you have an existing home already financed with FHA. Depending on the circumstances of your situation you might not need to even refinance your previous residence. Here's the info:
An applicant can have only one principal residence at any time whether rented or owned and regardless of the type of financing. An applicant, who owns and intends to keep a principal residence with a HUD-insured mortgage, may not purchase another principal residence with HUD mortgage insurance unless one of the following circumstances applies:
1. The applicant is relocating (and re-establishing residency) to another area not within reasonable commuting distance of the current principal residence. The principal balances on the existing FHA will not need to be reduced.
2. The applicant’s number of dependents has increased to the point where the present house no longer meets the family’s needs. In such cases, the following conditions apply:
a. The applicant must provide satisfactory evidence of the increase in dependents and how the property no longer meets the family’s need. (Keep in mind; the applicants must be able to prove the house can no longer physically accommodate the family. Each child wanting their own bedroom, or simply wanting a house with a family room does not prove “need”); AND
b. The applicant must also pay down the outstanding mortgage balance on the present property to a
75% LTV or less (excluding and financed MIP). A current residential appraisal must be used to determine loan-to-value. Tax assessments, market analyses by real estate broker, etc. will not be acceptable
3. The applicant is vacating a residence that will remain occupied by a co-mortgagor, the individual vacating the property is permitted to obtain another FHA-insured mortgage. This does not permit two married individuals to own two primary residences but may be used in such circumstances as those following a divorce where the vacating ex-spouse will be purchasing a new home or where one of the co-mortgagors will vacate the existing property and is getting married
4. An applicant that will be a non-occupying co-borrower on property being purchased with a FHA-insured loan as a principal residence by other family members may have a joint interest in that property as will as his or her own principal residence that is covered by a FHA-insured mortgage.
In all other cases, the purchasing applicant must either pay off the HUD-insured mortgage on the previous residence or terminate ownership of the property.
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