What are some possibilities for securing financing now for a $499,000 house with the following "obstacles"...
1. I just filed bankruptcy;
2. I am a physician who has taken time off to raise a young child. I have a new employment contract in hand and will be making $350,000/year, but I will not start this new position for three months;
3. My fiance makes $63,000/year. His credit is average (~640);
4. The homeowner is unwilling to do a lease/purchase.
I'm looking for a solution now because I do not think that this particular house will remain on the market for very long.
Welcome to BP Karen!
Actually, with that contract in hand, you could qualify for conventional financing if it had not been for the BK. So that' the problem, not past employment as you can address that with good reason.
What's the cash on hand picture look like?
Is here an exiting loan with the seller of is it free and clear?
Since you are not married, we may start with doing the deal in his name only.
Talk to a bank about a portfolio loan in his name and you sign as a guarantor, not a borrower, I suggest a smaller bank. While his credit is not o hot, there is a compensating factor with you as a guarantor based on your expected income. Since you are not a borrower, your credit is less important and technically should not breach bank policy.
What is the seller willing to do, anything besides a cash sale?
You may need a straw-man deal, if you can get a better price another buyer can purchase and then flip it to you.
If I came to you for treatment you'd want to know everything about my history, if you don't want to spill it all in a public forum, you can PM me. What was the reason for the BK? Cash on hand? Has your friend been late on any mortgage in the past 12 months? Have you given any deed in lieu of foreclosure or had a foreclosure in the BK or a short sale? Has he or you had any of these matters?
See what we can do, lots of ideas her on BP and some folks in your area. :)
Thank you so much for your response; it gives me hope! I am happy to answer all of your questions, but I'd like to do it in a private message. Do you have to be a "colleague" in order for me to send you a private message?
Let me know and thanks again!
I believe so, a small price to pay, LOL just send the request and I'll see you there....
Back to the forum for help from everyone.
We are looking at a private investor, here. Maybe a sub-2 with a note to the seller and selling a note for cash to the seller.
Any note buyers in NEW?
Issues prevent banking, so a flipper, might buy, but they need to make some money for the deal, someone buys, perhaps with the note route, or financing and sells Contract For Deed perhaps, the deal must go to 5 years on the end buyer's side.
Seller needs cash, don't know how much. Ask that agent how much equity she needs from the transaction and you might pay a little more if the seller works with you and ensure the agent knows she will get her commission (That's what they want to know in these deals).
Karen, add what you like here and details.
I gotta run, Good Luck..... :)
@Karen Paul Ok a couple of things. First off is your Bankruptcy a Chapt 13 or 7? There's a couple of things that come to mind. You might talk to an attorney about the legality of forming a corporation for your business, and purchase the house through that if you still have an active bankruptcy.
If you can do that, you may be able to get an investor to buy the house, giving you a lease with an option to purchase for an agreed upon price, within a set period of time. We did that one time on a commercial piece that we wanted to tie up while we were waiting to close another deal.
My bankruptcy was a Chapter 7 and has been discharged.
Are lenders willing to lend money to a corporation that is owned by someone who has recently filed bankruptcy? That sounds like a really easy solution! Almost too easy;).
I would be willing to use an investor. How would I go about finding one?
@Karen Paul I'll be honest and say that unlike Bill Gulley, I do not think your employment contract is strong enough to motivate anyone to lend to you. I don't know anyone who wouldn't want to see at least 90 days of income paid from that contract. Going from unemployed to employed with a contract is great, but it doesn't show a lender or seller that the income is secure. Unless the terms of your contract provide you'll be getting paid regardless of performance. :)
That being said, I know high earners with recent BKs, foreclosures and/or bad credit who have private lenders for their primary residences. The borrowers are paying 10-12% interest and all parties are happy with this arrangement. But again, the high income was constant and verifiable. Interestingly, one of the lenders is a doctor. You may want look to your family, friends and community to find private parties looking to place money at high interest rates. Other professionals in your field may have more understanding of the value of your employment contract.
@Account Closed , JFYI, Secondary market, Fannie Mae will accept a professional who has verifiable employment within 90 days who has sufficient cash under certain circumstances;
1. Getting out of college and no past steady employment history
2. Getting out of military service
3. Having been on a religious mission/studies
4. Leaving the work force for the care of a child or parent
These are done with letters of explanation, I have done them and have had them funded and closed.
This is an underwriting issue and not many Realtors are exposed to these unique issues. Many lenders can make such decisions and hold the loan in wholesale blocks to be sold at a later date.
Among such professionals funded with this issue (current employment) has been a doctor, a lawyer, an engineer, a pilot and an FBI Agent. The length of time out of the work force is also considered, generally I would say less than 5 years because that is the longest period I have successfully accomplished this and she was an attorney, who had a corporate job starting having gotten out for the care of her child.
This does not apply to those who have lost a job and undergraduate type professionals without specialized experience. Graduate students, Phds, M.D.s J.D.s have a much better mortgage payment experience than the general population.
But, bad things do happen to good people and that's what we have here, so this exception, as I said above will not be applicable in this case.
If anyone would care to research this, look to the requirements to be met at the time the loan is sold into the secondary market by a wholesale mortgage underwriter. Underwriting latitude. :)
Sorry Karen, I'm afraid a new corporation won't cut it, it will have no credit history as a commercial loan and the loan would need to be personally guaranteed which then brings the credit issues of the guarantor into the picture.
As K. Marie points out, private money is the best option, but not unless she can find a lender and asking peers could be difficult around work.
It also appears we have an issue with any loan to value with limited funds, another situation that a private lender/friend could overlook but not a hard money lender.
Until we get some feedback from the listing agent on what the seller might be willing to do, it's kind of dead in the water, unless private funds can b located or a straw buyer comes forward and then re-sells the property.
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