Home Buying in San Diego>Question Details

Pablo Chavar…, Home Buyer in San Diego, CA

My wife and I have a condo, but would like to move into a larger home. What options do we have in getting a loan? (specific information below)

Asked by Pablo Chavarin, San Diego, CA Tue Jul 2, 2013

*Credit for both of us is excellent (above 720)
*both of us are teachers
*condo mortgage is under my wife's name
*condo's current value is listed at $154,000/underwater (according to Zillow)
*We owe $185,000 on the condo
*We are looking at property management groups to rent our condo
*Our combined mortgage/insurance payment is $1410.00
*mortgage did not originate from Fannie Mae or Freddie Mac/No HARP option
*gross pay for both of us combined is $10,100/month
*Have $45,000 available for a down payment and closing cost
*monthly payments (all) are a combined $2,660
*Miscellaneous expenses are approximately $1500/month
*student loans are deferred at least two years

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Answers

21
Pablo

Contact me to discuss all your options. It is free consultation. You are not bound to use my services.

Manju Gupta
858-947-8490
0 votes Thank Flag Link Thu Jul 25, 2013
Do you have a purchase price in mind? A couple of options:

1. If you have enough for a 25% downpayment, you can buy the larger home as an investment, and use the rental income to qualify.

2. If you qualify, purchase the home in your name. Your wife can still be on the title.

rdeblanco@firstcal.net
http://www.firstcal.net/deblanco
619.768.0025
0 votes Thank Flag Link Thu Jul 25, 2013
Pablo,

Some great responses below. It would appear that you are in a position to purchase....the target $$$$ amount can be derived fairly easily; however, the biggest challenge you (and every homeowner who is underwater) has to "convincing" the new lender that you are not planning to "buy and bail"....in other words, purchase a new home and then allow your existing home to go into foreclosure.

There is much more involved with getting a purchase loan approved for a consumer trying to buy in your situation. It is as much about story behind your desire to purchase as it is about the debt to income ratios, credit scores, etc.

To start, most lenders are not going to allow use of any rental income to offset the current mortgage payment. Six months reserves will be required, post closing. If you were to go FHA, it will not help to do the loan in your name only because we will use all debt...including wife's....in debt to income calculations. This is because CA is a community property state. Conventional loans do not have the same overlay. Besides, mortgage insurance is far less on conventional, so it would be difficult to understand why FHA would be a consideration.

At the end of the day, we still have to overcome the threat of declination for "buy and bail". The story and veracity of your plans needs to be addressed way before the file in on the underwriter's desk. If it is not, your file would almost certainly be declined. And, convincing a underwriter to change their mind after the fact is a near impossibility.

Lastly, it is highly unlikely you would qualify for a "hardship" short sale. Therefore, if you were to short sale your condo there would likely be a two year waiting period (at least for your wife).

Best of luck to you. Of course, I would be happy to answer any concerns specific to your situation.

Deborah
NMLS #279125
0 votes Thank Flag Link Tue Jul 9, 2013
Hi,

It is really best that you consult with at least 3 lenders. This is a financing question, not a question that agents can answer.

Best of luck to you,

Mark & Kari Shea
Shea Real Estate
National Association of Realtors
CA DRE License 01713506
0 votes Thank Flag Link Tue Jul 9, 2013
Without 30% equity in your home, standard underwriting will not offset your payment with potential rent. If you are attempting to qualify with the rental income, the underwriter will require the appraisal be submitted.
You do need to consult with a mortgage professional as to what specific loan amount you will qualify.If you are able to go conventional, you could qualify with just your income and not have to count the condo payment against you as it is in your wife's name.
0 votes Thank Flag Link Wed Jul 3, 2013
What i can tell you as a Senior Loan Officer i have seen how inacurate is zillow the most acurate thing to do is have the home appraise, also make sure that is a full appraisal not a drive by appraisal.
0 votes Thank Flag Link Wed Jul 3, 2013
Pablo - you're looking good on income and Zillow offers "zestimates" so it's best to let a professional assess current value of your home. You may need a short sale or find that you can break even on the condo. Condition of home, upgrades, recent sales, and your financial ability will determine if condo goes short or not.

I have worked with a few homeowners this year to leverage their first home and "buy up" in today's market - the opportunity to own a dream home with low interest is now. Worth exploring your options!

My best advice - pick 3 realtors and interview... us! Find a realtor you feel has the experience and ability to help you in a particularly complicated scenario like this. You can truly "up your game" right now or fall victim to some expensive problems.

Questions to ask:
1) How many homes have you sold in the past year?
2) How many homes have you sold in my neighborhood? Or similar homes?
3) What do you charge and what do you offer?
4) How will you market my home?
5) What short sale experience do you offer? What short sale support do you offer?


Sarah Scott, Pacific Sotheby's International Realty
cell 619.840.2767, sarah.scott@sothebysrealty.com
0 votes Thank Flag Link Tue Jul 2, 2013
Pablo

First of thank you for giving lots of detail information. In order for me to determine what can be done or can't be done, still need more information. Should you want, I can sit down with both of you.

I do agree with my fellow agent that you have a great potential for doing a short sale on your condo. But that should be your last resort because you still want to buy a bigger place. If you do SS on your condo, it will be very difficult for you to buy the next property for next three years, secondly, your fico score is great and that could be ruined, thirdly, you may have tax consequences that you need to discuss with your CPA. The list goes on.

I will be more than happy to discuss with you further. Please contact me at
Manju Gupta
858-947-8490
0 votes Thank Flag Link Tue Jul 2, 2013
Hi Pablo,
My first question is, are you related to Edoardo? we went to school together from 1st to 12th grade.

Second very important question. Is(are) your loan(s) the original loan(s) you used to purchase the condo? or did you take cash out of the home via Refinance?

I would love to talk to you on a plan that works for you, give me a call or email when you have a chance

Hector R. Gastelum
Realty Executives Dillon
REALTOR #01382940
hectorgastelum@yahoo.com
619-954-2225
efax 619-270-2516
0 votes Thank Flag Link Tue Jul 2, 2013
Hi Pablo,

Your first step would be to short sell your current home. There's still a chance you won't be able to unless you have a hardship that you can document. Some agents will say they are short sale experts, and you'll have no problem, but the bank is the one who decides, not a real estate agent. Also, prices have gone up during the last several months, so you may be less under water, hopefully. If it's not, it's not, no agent can make it worth more. Listing with an agent who "buys your listings (tells you your house is worth more just to get the listing)," will waste your time and cause you to potentially buy less house as prices increase.

You could try to buy your new home contingent on you selling your current home, but we're in a seller's market, and a seller will usually have many other, easier, offers to choose from. It may be difficult to close on a sale and purchase simultaneously, since inventory is low. It'll take you longer to find a home than to sell your condo.

Your second option is to rent out the condo. While lenders will consider rent as income when the property has been rented 12 months, you may not need it with both you and your wife qualifying for your next home, as long as your wife can qualify for both. Plus, you wouldn't have to worry about a place to live after you closed on your new home. You'd just need to get a renter for the condo. If you're skittish about this, there are some great online resources for landlords, such as getting background checks, the rights and responsibilities of both landlords and tenants, or you could just hire a property manager. After you learn about what you need to do as landlords, you could manage it yourselves if you wanted, and have a real estate attorney on hand. It never hurts to have an income property, especially if it cash flows.Rents increase, fixed mortgage payments stay the same as the loan is paid down, and appreciation adds to equity. Agents tend to see the listing opportunity, those who have invested in real estate tend to see the long term benefits to the owner!

You don't have enough for a 20% down payment conventional loan on a larger detached home, at least one over $225K. But you have plenty for an FHA 3.5% loan, or a 3% conventional loan.

The question is, what would you feel comfortable with as a monthly PITl payment? Also, add the $1,410 to your total monthly expenses of $2660, if you didn't do that already in your question.

While you're deciding about the condo, part of step one would be to contact some lenders, giving them the same useful information you gave here. One really important thing when choosing lenders, find out where their underwriters are located. They call the shots when approving your loan. I just closed an escrow with a lender of the buyer's choosing who used outsourced underwriters. The loan was in underwriting for seven days and put the purchase in jeopardy. Some lenders still use in-house underwriting. It could be the difference between defaulting on your contact and getting the house.

The bottom line is that you have options. Don't hesitate to contact me off forum with questions or for further information.

Warm Regards,

Cory La Scala, REALTOR
Independence Realty
619-825-6421 Direct
619-884-3452 Cell
Lic # 01443391
0 votes Thank Flag Link Tue Jul 2, 2013
Pablo, you're going to have a problem obtaining a mortgage, if you're underwater on your current property. Your house needs to have equity in prefer to qualify for a mortgage.

If my response was helpful, consider clicking BEST ANSWER!

Javier Meneses
Senior Loan Officer
NMLS #23130
STERLING NATIONAL BANK
310 Crossways Park Drive
Woodbury, NY 11797
jmeneses@snb.com
(516) 606-9648 Cell
(631) 659-2011 Office
(516) 918-5383 Fax
0 votes Thank Flag Link Tue Jul 2, 2013
Hello Pablo!

You sound very well qualified to buy. Congratulations for keeping your credit up so well. A Zestimate on Zillow is just an estimate...I would be happy to look up actual value for you. Then you will be able to speak to a local Direct Lender (I have a list of highly recommended Loan Officers if you need referrals) to determine your qualifications based on what you owe on this condo. I am wondering since prices have sky rocketed in the last few months, if your condo is worth more than you think! Let's find out :-)

Chris Gorno
BRE# 01499885
Chrisgorno@gmail.com
(619)788-4345
0 votes Thank Flag Link Tue Jul 2, 2013
Pablo,

Paschal is dead on when he says that you will just have to deal with the fact that you cannot use your condo prospective rents to offset the mortgage, so it will be viewed as a debt. But here are the numbers so you have some meat:

Income: 10,100
DTI Max (conventional): 45%
Available "room" for mortgage payment plus debt: 4545
Subtract all debt: 2660
Leaves 1885 for a PITI payment.
That amounts to probably a 275K to 300K purchase price.

that is, IF I am reading your numbers correctly.

A) If you want me to run the true numbers, I can do that in 10 minutes over the phone and get you all sorted out.
B) If you need more, there are banks that allow you to use rent on the residence that you are vacating to offset the mortgage, so that is an option.


Give me a call or drop me a line if you would like to discuss in greater depth.

Thanks!

Daniel Lehman
858-345-4725
daniel.lehman@wjbradley.com
0 votes Thank Flag Link Tue Jul 2, 2013
Hi Daniel. The 2660 actually includes the condo mortgage. How would that effect the numbers?
Flag Tue Jul 2, 2013
Hi Pablo,

I think you are sitting in an EXCELLENT position. I have a feeling you "Zestimate" from Zillow is outdated and LOW!

I bet I can get you at least $185K in this market and would be glad to work out some discounted commissions if you Buy a home through me as well. From what I see your loan would be a SLAM DUNK if you don't have the other property counted against you.

I have a GREAT lender that does these types of deal all the time.

Check out our reviews at
http://sandiego4property.com/fine/real/estate/review1/custom

And contact me TODAY to get a plan together!

Frederick Remick
TOP PRO
15 YEARS OF EXPERIENCE
Keller Williams RE
619-519-3287
http://www.sandiego4property.com
0 votes Thank Flag Link Tue Jul 2, 2013
Good Morning Pablo,

Current underwriting guidelines will require that you qualify with both your existing mortgage and the new prospective mortgage as you have no equity on the condo if you both want to be on the new loan. In other words, you will not be able to use the rent for the condo to offset the mortgage.
However, you can try to qualify for the new home on your own and that way the mortgage under your wife's name does not come into the picture. Feel free to reach out to me for more information as we are located in San Diego.

Regards,

Paschal
0 votes Thank Flag Link Tue Jul 2, 2013
HI

As the previous answer said it does not sound like you will have a problem getting a loan. If you need help finding a lender I can give you a few names to contact. That is always your best place to start. If you are not working with an agent and would like my help finding you a home please give me a call or email. I also work with a property management company who can rent your condo for you and help manage it. Thank you and best of luck.

Robin Barron
Quality First Real Estate
619-871-7219
robin@thebarronteam.com
0 votes Thank Flag Link Tue Jul 2, 2013
Hi Pablo,

HARP 3.0 is around the corner and will allow you to refinance even though Fannie Mae/Freddie Mac do not own your loan. Definitely trying to refinance your property before you move so you can qualify for owner-occupied interest rates would be in your best interest.

If you would like, I can run a valuation on your home to let you know what it's worth. It will be much more accurate than Zillow. Message me privately (royce@roycekemp.com) with your street address and I can get that 20-page valuation report to you via email.

The market is hot so you might actually be able to sell for a profit, otherwise you'd have to qualify for your new home with the assumption that you have to make BOTH house payments (they won't count the income you'd receive as a rental).
Web Reference: http://www.roycekemp.com
0 votes Thank Flag Link Tue Jul 2, 2013
HI Pabo!,

Looks like you are in great shape. There are two things you need to do.
First, contact a realtor right away to get a true market value of your property.
A Zestimate is not a true market value of a home, it is a very rough estimate of value.
It can be off by as much $100,000!
If you send me the address, I can give you the market value in less than 24 hours.
just contact me at my info. below.

Second, is to contact a mortgage broker or lender to see what type of lending options you have.
My lender is
Jeri Winberg
ph: 619-997-8744
jeri.winberg@bankofamerica.com

Kevin Sanderlin
Keller Williams Realty
Cell 858-212-4702
kevinsanderlin@gmail.com
0 votes Thank Flag Link Tue Jul 2, 2013
Hi Pablo,
You and your wife have worked hard to put yourself in a nice position to buy a house.
I can help you with identifying prospective renters, along with prospective homes for your next place. Just curious where do you live right now?
Look forward to hearing from you,
Steve Seper, Broker/Owner
-Balboa Park Realty-
yourdooropener@gmail.com
CA Lic. #01703524
0 votes Thank Flag Link Tue Jul 2, 2013
Hi Pablo,
Your best bet is to speak with a mortgage lender to confirm that you qualify (although this all looks really good to me). If you need a referral for a mortgage lender, I can give you the contact information for the gal I use. I would be happy to assist you in renting your current property and in finding a new property for you and your wife. Feel free to call me using the information below. We can get started today!

Thanks!
​Sinead McAllister-Clifford
Real Estate Broker/ Realtor®

McAllister Homes Real Estate
Residential Sales & Property Management
http://www.McAllisterHomes.com
License 01366009
858-205-5215 CELL
info@mcallisterhomes.com EMAIL
0 votes Thank Flag Link Tue Jul 2, 2013
You shouldn't have a problem getting approved. If you want to discuss specifics, feel free to call me. Rents cannot be used to qualify, but your income is enough for you to qualify for both payments.
Web Reference: http://www.guildMESAsd.com
0 votes Thank Flag Link Tue Jul 2, 2013
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