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buying a second home as a primary residence

I currently own a home. I am buying a new home which will become my primary residence. With the income and dti ratios I qualify for both homes. My FHA loan is currently in the process of being underwritten. We gave a LOX when we submitted the loan package for why we are moving to the new home. Also I have a mid 740 credit score and no late payments. Do you see any problems with getting the loan approved.

gmakerley's picture
gmakerley | Joined: November 9, 2007 07:36 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

there's too few details to tell you that you're good to go, but if you wrote a nifty letter that explains all, then i'd think you'd have a reasonable shot at this. the key is making sense, so if you meet that requirement, that ought to do the job.

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Primarily my concern is being subjected to a buy and bail scheme which is not what I am attempting to do. I plan to rent my previous home and live in the new one. So we wrote a LOX explaining why we want to move across town about 40 miles away from our existing home....closer to school, work, friends, family. Other than that I have no concerns about the loan going through. I just know that underwriters are looking for people that are trying to scam the system and I don't want to be declined for a loan because of others bad behavior.

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smith.sussane's picture
smith.sussane | Joined: September 18, 2008 09:57 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi dogerfan!

Welcome to forums!

If you have explained your situation properly in the letter, then I don't think the lender would reject the loan. You will have to convince the lender about your situation and make him understand that you have genuine reasons to leave the present property and move to a new one. If the lender is convinced, your work is done.

Feel free to ask if you have further queries.

Sussan

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solidaynathan's picture
solidaynathan | Joined: March 13, 2009 01:24 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

Along with the letter, your solid credit rating will help as well. If you have no negative history that will lend credibility to your letter.

Sounds like you should be in good shape, but that was a great thought and valid concern.

Best of luck!

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gmakerley's picture
gmakerley | Joined: November 9, 2007 07:36 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

dogerfan, you aren't going to be given credit for rental income on the home you're vacating unless you have substantial (30% or more) equity in that home. 40 miles isn't an ordinary relocation situation, so your explanation letter must be extremely well spelled out, and you're going to have to qualify for this new loan while still holding your current home with the full payment. if that all can work, then you ought to be able to move forward as you desire. if not, that can cause you some severe difficulty.
and i agree that it's too bad that some have to suffer for the sins of others, but at the same time, there was a lot of risk taken in the past and sensibility is actually returning to the mortgage market, though some of it is definitely overkill.

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

We received our Final approval from the underwriter and loan docs are being sent to the title company. Also we have found a renter for our existing home.

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gmakerley's picture
gmakerley | Joined: November 9, 2007 07:36 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

good for you dogerfan. i wish you well.

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Which lender did you use? We are in the same situation, but the lender is slow! We relocated and the house was too small for our belongings, found a better situation, 788 credit score and adequate income for both mortgages. Purchase is appraised at 5% greater than contracts...want to close yesterday..Have renters in the home at this time and early occupancy where we are, but very frustrated that they can't seem to close a loan in less than 8-10 weeks because they are "busy." We applied in Jan. with pre-approval, made offer in JAN.

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gmakerley's picture
gmakerley | Joined: November 9, 2007 07:36 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

it's been a very busy time for a lot of lenders. what it comes down to is dedication and determination. if a lender wants to get a deal done in a specified timeframe, it can be done. what it takes is a commitment on the part of management to ensure that borrowers' needs are met.

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

We are experiencing the same type of problem. We were recently, 1.9 months, have scores of 800 and 760, make about 199,000 a year and a VA gaurantee. They mortgage company we are currently working with says both are incomes cannot be used because one of us has a loan on an existing property which does not meet 25% of the value. Is this requirement law? It appears I will meet the capability for the loan independently but find this to be a bit restrictive. It also appears this type of restriction will continue to drag the market down as more and more of us have been increasing our savings accounts and do not want to have to sell current properties in this market. Which again would have to be at a reduced amount further dragging the values down. Thanks for any insight as to the requirement being law/legislative in nature.

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Niicss's picture
Niicss | Joined: October 3, 2005 11:54 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi Skywalker

Do you want to refinance the property? If you want to [url=http://www.mortgagefit.com/refinance.html]refinance[/url] the property, you need to have equity in the property. If there is no equity in the property, lender's won't offer you a mortgage. If you meet all the eligibility of getting a loan, then you should go for it alone.

Thanks.

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gmakerley's picture
gmakerley | Joined: November 9, 2007 07:36 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

skywalker, i don't quite comprehend what that lender is trying to tell you about this 25% issue.

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

I am also looking to buy a second home however we don't qualify income wise for both propertys. We already have our house rented out but the loan officer said something about waiting six months so we can have proof of six months of renters. He said we would need cancelled checks however our renter does not have a checking account and was going to pay us cash. So I guess the question is how else can we prove the rental besides cancelled check? Hope this all makes sense. Thanks

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gmakerley's picture
gmakerley | Joined: November 9, 2007 07:36 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

am i safe in thinking that marissa and skywalker are the same person? it seems so.

i suspect the 25% thing, on further reflection, relates to your leaving your current primary residence while renting it out to take on this new property. yes, there is an issue with doing that. is that what it might be about?
your tenant ought to pay you with money orders or bank checks to make that loan officer happy, but if you maintain quality records (receipts, etc.) and make timely deposits of the funds you receive (so that you can document receipt), that ought to be enough to make them happy. again, the waiting period discussed is probably related to your vacating a current primary residence to make this new purchase. ask that specific question...you seem to be getting vague answers.

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

gmakerley, no I am not the same person as skywalker. I guess we are just in a similar situation. I am getting vague answers but you did clear it up. Thank you so much for your time.

One last question, would you recommend going with the bank or a seperate mortgage company. The bank seems to be lagging on getting back to me. Thanks!!!

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gmakerley's picture
gmakerley | Joined: November 9, 2007 07:36 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

well i can easily be selfish and suggest that a mortgage company such as mine and a loan officer such as me is your best bet, but i won't do that.

what you need to do, in my opinion, is find someone with whom you are simpatico, who you feel you can trust to treat you properly and direct you through the process of a purchase. if there's a dissatisfaction with the service with the bank you're talking about, you might take that as a sign not to go that direction.

keep in mind one thing, however. every lender is stressed out these days, and that makes every loan officer less apt to be able to respond as quickly as you would hope. the process is agonizing - far more so than in the past.

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

I am trying to upgrde to a single fam already have renter set up for my unit in a multifamily trying to get an fha loan for 2 mnths received a conditional approval provide everything they ask for was told ready for closing then was told not ready lender have to do a departure appraisal on my multifamily very dissapointed dont have any equity dont thinkwhat isthis departure appraisal for ? not satisified with explaination from loa

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gmakerley's picture
gmakerley | Joined: November 9, 2007 07:36 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

this is a new requirement (not quite sure how new, but clearly not something we used to do not long ago). there were too many instances of borrowers claiming to buy new primary residences and maintaining existing homes as rental that were truly not the case. now, therefore, everyone is treated with disdain - not by individual loan officers or companies, but by the marketplace in general. fha, of course, being a primary residence lender only, is going to be extra careful in these matters.

i hope this sheds a bit more light on the situation than you'd received from your current lender.

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

We too are in a similar situation. We found our dream home about 20 minutes away. It is twice as big as our current home and ideal in every way. However, we own another home and haven't even listed it. Why the hurry? The one across town is a foreclosure and it goes up for auction in 2 weeks. This means we have to make an offer prior to the auction starting! I don't work, my husband does and has been with his company 13+ years... and our credit scores are both in the 800's. Besides the mortgage on this home... we have no other bills. Cars and such are all paid off. The new home will have about a 50% LTV due to the foreclosure. It has an appraisal of $607, 000 but the bank needs to get rid of it and has accepted $300K. We have 20% equity in the current house. We can float both mortgages... but it will be tight. Any advise on how to get a lender on our side?

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gmakerley's picture
gmakerley | Joined: November 9, 2007 07:36 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

christi, you may be thinking about 50% loan to value, but that calculation is based on the lesser of sales price and appraised value, and your ltv is going to be calculated on the $300k price instead. what's your down payment?

as for borrowing, if you can convince your lender that you've got the wherewithal to make payments on each of these two homes (they won't include rental income, if any), then you ought to be able to get one "on your side."

you're right - this is tight timing, but if you have a contract in and it's accepted, then the auction will be held off until such time as you've either been approved or declined for that mortgage.

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

i withdrew all my savings and 401 k because of illness but have some of that money cash so now the unwritter needs bank staments from 6 month ago or 401 k statements or liquid assets i do not have that what cant i do ? my lender said if i do not come up with something i am going to loose approval !!! in california

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smith.sussane's picture
smith.sussane | Joined: September 18, 2008 09:57 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi amber!

Welcome to forums!

It is true that if you cannot come up with the required documents, then you won't be able to get the mortgage. I would suggest you to inform your lender about your present situation and let him know that you won't be able to produce the documents. He might help you with some other option which you may produce in order to get the loan.

Sussane

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gmakerley's picture
gmakerley | Joined: November 9, 2007 07:36 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

I think the present lender is aware of the situation. Amber, go back to the banking institution or the financial institution in which you had those funds, and although they'll undoubtedly ask for compensation, they ought to have sufficient records that they can provide you with the information you need for your mortgage. Tell them how important it is if you want fast, efficient service, of course.

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