Home Buying in Gilbert>Question Details

Kim, Home Buyer in Chandler, AZ

FHA loan question

Asked by Kim, Chandler, AZ Mon Dec 12, 2011

Facts..husband and I are seperating. We have a house now with B of A one conventional loan..we are either going to short sell or refi this house. My goal is to buy a house in my name only since my credit is great.. I have an 800 credit score and decent income (55k-60k a year or so) and no debt with the exception of me being on current house mortgage as co-signer. B of A has pre-approved me for FHA loan in my name up to 170k. I do all my banking with B of A so figured I would call them first. I am W2'd and able to show proof of all my income base comm (2.5 years). Should I have a back up lender? I guess I'm worried about B of A declining me at last minute. Loan officer has 20 years exp. and said he is making this new home primary residence (which is true I am moving in) and current house secondary. My pre-approved rate is 3.875/4.664% 0 discount points. What is the deal with FHA except I have to pay PMI and not all homes qualify for this? I do not have a house in mind yet but looking.

Help the community by answering this question:


Regarding the 2 owner occupied properties. I know how to do the loan for you. I have done many with people in your situation. Call me when you have a moment
0 votes Thank Flag Link Tue Dec 13, 2011
Ok here is where we stand. I cannot have 2 owner occupied residences...even though I made it clear to B of A what I was doing...it looks like I am going to have to either divorce my husband and have him awarded the house...or buy this other home as N/O/O and 20% down which is impossible right now. Sigh. I cannot believe even with great credit and a good job and litle debt..I cannot buy a home right now in my name near the one I currently own with my husband. Very frustrating.
0 votes Thank Flag Link Tue Dec 13, 2011
The benefits of using FHA is that they only require 3.5% down, and they allow higher debt to income limits. What the loan officer did not mention, is that you will not be relieved of the debt you have on the home with your husband. As long as your husband will work with you it should not be a problem. If you can refi the home in just his name that would be even more ideal for you.
Regardless of who you use, if you would like peace of mind, stear clear of B of A . I clean up their messes all of the time.
Kevin Lambe
0 votes Thank Flag Link Tue Dec 13, 2011
Kim, I have a great lender for you. He has been doing loans in the valley for over 20 years. It is best to consult a Mortgage lender as sometimes they can do better than a bank.
I would like to chat with you, so, if you are interested, please feel free to get ahold of me.
I have been an agent in the valley for over 13 years. It would be my pleasure to help you.
0 votes Thank Flag Link Tue Dec 13, 2011
I appreciate everyones help. I think it's time I get another lender involved.

0 votes Thank Flag Link Mon Dec 12, 2011

I'm sorry to hear about your situation, divorce is no fun but sometimes the best. Been there, done that, didn't want it but it turned out best for me in the long run!

Good lenders come with experience, I have a couple that I have worked with for years that are very dependable. They will request documentation at time of pre-approval. With the documentation in place we can move on the house with a very high level of confidence that the pre-qualification is solid.

Good question as some lenders are to quick to provide a pre-qualification without doing the proper homework.

You seem to have a good framework for the basic situation at hand, now you just need the right people to execute the plan. Not sure I want my new loan with my old lender in your situation.
Web Reference: http://www.McVinua.com
0 votes Thank Flag Link Mon Dec 12, 2011
Hi Kim:

I was home sick today and probably will be tomorrow, but would be glad to help you decide what is best for you. You can reach me at Bill.Parker@LegacyG.com if you wish to continue the conversation in the meantime. Just realize I will not be available at all times tomorrow as I recuperate. :)

You have a complicated situation which will take more than a public forum like this to solve. I have to respect what someone with 20-years experience in this business has told you, and may end up telling you to stay where you are, if that is what makes sense. (Does BofA have your current mortgage?)

FYI--at this stage in the home buying process, unless you have a locked interest rate GUARANTEE from BofA that gives you an unlimited amount of time to find and close on a home, a "pre-approved interest rate of 'whatever'" means nothing. Rates change everyday, sometimes up to 3 or 4 times, so it would be very unusual. Ask your BofA LO if it is a "locked interest rate of 3.875%"?

Take care.
0 votes Thank Flag Link Mon Dec 12, 2011

B of A will want to know what you are going to do with the current home.... such as rent it out or sell. If selling and the value isn't there then they will see the handwriting on the wall. It may be better to use another lender that will not have the same interest as B of A. Please feel free to contact us to discuss your situation further and I would be more than happy to give you a couple lender names.

Warmest regards,


Ron & Brenda Cunningham
West USA Realty
***** Recognized in the Phoenix Business Journal as "One of the Top 50 Realtors in the Valley" *****
0 votes Thank Flag Link Mon Dec 12, 2011
Thanks for the advice. I want to stress we are not going to do anything on our current home until this other purchase goes through. We understand our credit is going to take a hit with a short sale and we intend to make all payments for now. It is possible my husband will want to keep this house if we are able to refi..again my loan officer said not to do anything on our current home until the closing of the second home is final. Unfortunately our payment on our current home is $1500/mo and when we split this payment is going to have to be lowered in order for husband to keep this home, otherwise we will short sale. If he loses his job, then payments are going to eventually stop. I am nervous about B of A playing games with me. Can somebody recommend a good lender/broker should B of A try to pull some stuff? I have good credit and a good dcumented and no debt outside the current mortgage. I don't see why I would be declined but preparing myself for the worse case scenario.
0 votes Thank Flag Link Mon Dec 12, 2011
HI Kim:

I am sorry to hear about your situation and hope that this is only temporary. May God's peace and blessings be with you and your family.

Regarding your financial situation, this is too complex to discuss in an open forum to get any answers you can count on. The bank for your current home will unlikely approve a short sale with your good income and credit records unless you stop making payments. Once you do, your ability to get a new loan will be affected.

Once you formalllyl apply all of these issues will present themselves to the lender. A pre-approval is less thorough in scope. If you are going to short sale a home your ability to get a loan will be jeopardized.

Jeff Masich
Arizona Homes and Land
Web Reference: http://ArizonaHomesLand.com
0 votes Thank Flag Link Mon Dec 12, 2011
Hi Kim,

FHA loan is most popular loan program right now - due to low down payment requirement of three and one half percent (3.5%). Most homes in your price range will qualify for FHA - although there will be some exceptions. Good RE agent helps with this issue.
If you short sale existing residence, your credit score will take a hit and you may not be able to finance a hiome purchase again for at least a few years. Mortgage guy seems to be giving you good advice. If you don't already have an AZ licensed agent, suggest we take this chat offline.

Steve Willis
(480) 292-0693 cell
0 votes Thank Flag Link Mon Dec 12, 2011

If you can qualify for a loan without selling or short selling your current home then by all means buy another home as the selling part is irrelevant to transaction. Plus if you go through divorce you will have a decree that lays out guidelines for selling assets(in this case liability) and a decision to who gets what between you guys. So I would worry about the sale after you move forward with your purchase. The short sale process can take between 3-6 months on average on either side of transaction(buying or selling).

As far as the FHA loan, it is a good loan that allows you to put a smaller amount down (3.5%) compared to a conventional loans' guidelines. FHA has a few conditions that need to be met in order to obtain the loan, which is what you are referring to. If the home has certain items that need repairs, FHA loans require you to have them fixed prior to closing as a condition to obtain that loan. So if a home does not qualify for FHA, it is either in bad condition, or has a few items that would not pass FHA inspection. With an As is clause on most short sales, the repairs will have to be paid for by you prior to closing. Its a great loan but it does come with some checks and balances that actually protect the purchaser from buying a home that needs excessive work done to it, or at least items that need to be fixed that are in the eyes of the FHA inspector.. a hazard.

Hope this helps, feel free to contact me with any short sale or regular questions, or if you would like to receive any property updates from the MLS.
Web Reference: http://brianrocca.com
0 votes Thank Flag Link Mon Dec 12, 2011
I am concerned I will be declined for whatever reason. Should i totally blow off b of A and go through another lender/broker? Also loan officer said to buy this new house first, then worry about selling or re-fi current home. Goal to close is by 1/28 as soon as i find house. All advice much appreciated.
0 votes Thank Flag Link Mon Dec 12, 2011
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