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Private Lending & Conventional Mortgage Advice

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David Mitro
  • Investor
  • Langhorne, PA
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Financing a Primary Residence- Need Help!

David Mitro
  • Investor
  • Langhorne, PA
Posted Mar 20 2014, 19:58

Here's the situation. My fiancé and I are trying to buy a new construction home. We were set to settle on April 30. On Monday, after working with a bank for over a month, we were notified that we were denied due to the fact that my fiancé had a foreclosure in July 2011. (Yes, we were also alarmed it took that long for something that is on her credit report to be noticed by them) Currently, you have to wait 3 years for a fha loan and 7 for a conventional after a foreclosure. The foreclosure was due to a divorce and neither of us have spent time in the military.

We were doing a Fha loan in her name only. We were doing it this way because I purchased a 4 unit property in August 2013 on my own and can't have another fha loan. I also wouldn't qualify on my own for a conventional loan as I don't make enough money.

The most we could put down would be 5%.

We are scrambling now and in a difficult situation.

Does anyone have any ideas and/or suggestions?

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Elizabeth Colegrove
  • Hanford, CA
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Elizabeth Colegrove
  • Hanford, CA
Replied Mar 20 2014, 20:05

@David Mitro

Are you not able to qualify because you have to carry the 4 unit? You will have to shop around but we have been able to find brokers who will allow us to count the income since the rent is on your taxes.

There is a conventional loan with 5% down. You other option is to see if the builder will do owner financing till july when she qualifies.

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David Mitro
  • Investor
  • Langhorne, PA
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David Mitro
  • Investor
  • Langhorne, PA
Replied Mar 20 2014, 20:17

I lost money on the 4 unit in 2013 due to only owning it for 4.5 months and having to evict non paying tenants. My w2 income is not enough to qualify on my own. My fiancé wouldn't qualify for conventional either because that waiting period is 7 years after a foreclosure.

She makes enough on her own for us to just do it in her name whereas I do not. But she has had a foreclosure in the past 3 years whereas I have not.

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David Mitro
  • Investor
  • Langhorne, PA
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David Mitro
  • Investor
  • Langhorne, PA
Replied Mar 20 2014, 20:18

And I approached the builder about doing a rent to own and they quickly shot that down. I'm sure financing it would be the same thing.

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Elizabeth Colegrove
  • Hanford, CA
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Elizabeth Colegrove
  • Hanford, CA
Replied Mar 20 2014, 20:20

@David Mitro

Even if you have a loss, if they will count some of the income you are not "carrying it all". In regards to your fiance I would see if the builder would carry it till she can use fha in the summer. Have you looked into usda loans?

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Marcus Johnson
  • Investor
  • Apple Valley, MN
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Marcus Johnson
  • Investor
  • Apple Valley, MN
Replied Mar 20 2014, 20:29

To me it sounds like you cannot afford a home right now. You don't have enough money between the two of you. Houses aren't blessings when your broke. Bi would wait and save up 20% for a down payment. Also I wouldn't by a home until your married because if something should happen and it doesn't work out then your both stuck on the note. Good luck and be patient. There is always another house to buy.

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David Mitro
  • Investor
  • Langhorne, PA
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David Mitro
  • Investor
  • Langhorne, PA
Replied Mar 20 2014, 20:36

@Elizabeth Colegrove I have briefly looked into USDA loans, but I believe our household income would be above the limit for our county.