I represent Wells Fargo Home Mortgage and am licensed in Alabama if you would like to discuss.
Your bank is in error. FHA guideline are more than clear on this: If you need another home because your family have outgrown your current one, and you can document that with tax returns (showing number of dependents and (if adults) number residents) and a MLS listing ticket, public record assesment page, and or appraisal to confirm number of bedrooms, you can qualify for a 2nd FHA mortgage. However, due to your children ages, despite their opposite sexes, some lenders may feel they can still share a single bedroom.
@ Cheryl. We are not in a position where we would need to sell or trying skip out of debt in any kind of way, We're able to afford our mortgage. From my understanding a short sell is when you can't . Right? We are simply in a home that we owe on and are looking to move into another that will be ready within a months time and we are sure this home won't be on the market long at the price they want for it.
To simplify my initial question. Can I use the extra cash on a cash out refinance to pay the down payment on a conventional loan that will pay for the new home and also pay for the old home. We then will sell the old home and put the money towards the principal of the new home.
Thanks again everyone.
The idea of borrowing on an existing home to buy a second could put both homes at risk.
Go to. http://www.amerisave.com, your local bank where you bank.
Also try out http://www.penfed.org
Rates are now below 5%, so paying 8% on your current mortgage makes no sense.
Your score of 622 is low though.
So first things first refinance your current loan.
Then I am sure you will have a better chance to qualify based on your income and total out goings per month.
You have a difficult situation at best. With a credit score of 622 you will most certainly be restricted to an FHA loan. There is a little known provision that allows you to purchase another home using FHA financing if you can prove you have outgrown the existing FHA financed home. The burden of proof will be on you and no lender will take such an exception lightly.
You might want to consider a FHA streamline refinance using a 5 year ARM (currently around 3.5% w/0 points). You will be able to save some serious money during the upcoming months. In the mean time, do everything in your power with the extra money to improve your credit situation in an effort to improve your credit scores. You really need to set your focus on a credit score of at least 680 to help your cause. Your current score of 622 puts you on the edge of "no man's land". Good luck and stay focused!