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My situation-31 years old, been employed by same company for 10 years. 85k/year. Wife, kindergarten teacher-45k/year. We bought a home for 435k in 2007, at bubble price. It was a mediocre house, 3 bed, 2 bath, 1610 sqft, small lot. Bubble popped, CA lost a lot of taxes due to housing prices. My wife lost her job, along with 105 other teachers in her district. We short sold on the house with BofA. Had to miss a few payments or they wouldnt SS. We SS in Jan 2012. Since then we've been paying 1500 rent to my dad. He owns 3 houses. My wife got hired in a different district, shes one year from being "tenured." We have 30k in savings and 60k in my 401k.
Ive done calculations....without rent, my DTI is only 8%. We only have one car payment and its got 2 years left. With rent its 22%. I checked my credit about 2 months ago, and it was right at 700. My wife and I would like to buy another house. Problem I see is housing prices in this area are going right back up.
I mean Ive been watching and in some neighborhoods its over 10% in just the last couple months.
What Ive been debating is, renting for a few more years, in a different house with a little bit more rent, and saving up more for an actual 20% down payment. Or buying right now, before prices creep up and Ill have to overpay....again?
How much mortgage do you want to take on? My opinion is that you need to save a lot more before going down that road again. I guess is you had little to no reserved the last time.
You are correct. I was 26 and looking back, incredibly dumb. Went through the Acorn zero down program, what a joke that was.
All the calculators I run say I can "afford" 650k. Yeah, I definitely dont agree with that. No way I want a 3900/month mortgage. Comfortably, Id say we could afford about 2k-2500/month tops. Right now, with the 1500 rent, Im also saving on average 2300/month.
I'm am going to be direct, so please do not take my comments as judgmental. You will need a thick skin to defend your credit worthiness for a mortgage. If I am reading this correctly, there's a good shot a lender will view your short sale as a strategic short sale and not one of need, even with your wife not working. In other words, you sold because you were upside down. You need to review your accounts from back in January 2012 and just prior to, the same accounts you want to be considered for your new mortgage. You, yourself, said you went late, only because you had to for the short sale to be approved. Will your bank statements show you had the money in the bank to make a payment when you skipped payments?
An important point will be how long has your wife been back to work? If you are using the loss of her job as the reason for the short sale, it's going to be a tough sell saying you are ready for a mortgage if she hasn't been back long.
Fannie Mae allows you to purchase with in 2 years with 20% down and in 4 years with 10% down. But to do this, an automated approval must be received. Not many are getting the automated approvals and the mortgage insurers are also very tough. For maximum Fannie Mae financing, the Fannie Mae standard is 7 years after a short sale. FHA will make you wait the complete 3 years, but will charge a small fortune in mortgage insurance. And while many are buying post short sale, buyers with strategic short sales are facing the absolute toughest underwriting. It won't be impossible, but it's far from a cake walk........
Why not wait until you have 20%. That way you can demonstrate that you won't default again. You have a great opportunity to save renting from your dad. I am sure that he is giving you excellent price. Take advantage of that.
Our SS closed wth BofA in August 2010. You are required to wait two years past your short sale in order to qualify for another loan. We just went through this with our lender. Oh, by the way....check all three, ESPECiALLY Experian, credit firms. Thousands of folks, us included, had their SS recorded to the credit bureau(s) as a foreclosure and not a short sale. For us it was Experian. If you look at your report it will not be super obvious to see there. You will see for example that you defaulted payment, etc. etc but it wasnt until our lender starting getting into the deal that they came back and said Experian reports our SS as a foreclosure. Worth looking into amd getting fixed before you apply for a loan because let me tell you, fixing it took forever.
And with our new loan...we had to put down 20%.... wasnt an option for us. If you have defaulted before, expect many bumps in the road, roadblocks and banks pushing back and asking you for basically blood samples in order to get approved. This process has been a huge stressful challenge....FAR cry from a cake walk
Thanks for the replys Smartmoney and Copsgirl. Ill be honest too. I could afford to make the house payment at the time of SS, but thats about it. I would have been house poor. Being as though I was upside down by 190k, and HARP refuse to do anything cause I made too much. Being as though we were that far upside down, and we had planned to stay there only 5-7 years as it is, we decided to walk. My SS is being reported as "paid in full for less than owed."
20% for a house that I would like to buy is going to be 80-100k. Thats going to take at least another 4-5 years. I could possibly handle it, but I know my wife couldn't. She hates living where we live and having to pay rent to my Dad. We have 2 young boys, and the neighborhood its in, the surroundings have gone downhill quickly. I hear gunshots all the time.
Thanks for the replys Smartmoney and Copsgirl. Ill be honest too. I could afford to make the house payment at the time of SS, but thats about it. I would have been house poor. Being as though I was upside down by 190k, and HARP refuse to do anything cause I made too much. Being as though we were that far upside down, and we had planned to stay there only 5-7 years as it is, we decided to walk. My SS is being reported as "paid in full for less than owed."
20% for a house that I would like to buy is going to be 80-100k. Thats going to take at least another 4-5 years. I could possibly handle it, but I know my wife couldn't. She hates living where we live and having to pay rent to my Dad. We have 2 young boys, and the neighborhood its in, the surroundings have gone downhill quickly. I hear gunshots all the time.
Our credit report said the same thing. The error shows up in how the transaction is coded on the credit report. So it may say "paid in full for less" but ours was coded wrong so essentially the bank read it as foreclosure. Experian has been reporting this incorrectly most. Basically there is no code for "short sale" so they just used the same one as a foreclosure.
A buddy of mine is a mortgage rep for Wells Fargo. About September last year, I told him to run my numbers for a preapproval just to see if I could get anything. He said that the underwriter stated, "the house had a delinquent notice in October and the short sale didnt happen until January, so we treat it like a foreclosure."
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