Home Buying in Cleveland>Question Details

crl, Home Buyer in Cleveland, OH

Tricky timing question!

Asked by crl, Cleveland, OH Sun Jan 26, 2014

Tricky question. We are a 2 physician (currently residents becoming attendings in July 2014) couple - currently making 150K and have lived in a 170K mortgage home for 4 years (first mortgage done via Physicians Loans so put nothing down). On 7/1/14 my husband and I both start new jobs (and we have our contracts) making our combined salary 550K. We have 20K now in savings and in July will have another 25K.

We would love to use a Physicians loans product again - or some 5% traditional if that would still exist - to buy a 650K house that is "heading for pre-foreclosure". I love the home we found, and would hate for it to go into foreclosure between now and the time we could secure financing. Any strategies anyone could think of? I recall the last time we did this, we closed as medical students in May and started our jobs as residents in July...so I'm thinking the same thing could happen again...Would a bank take that long a contingency that would take 3-4 mo to secure financing?

Help the community by answering this question:


Anything is possible. The big question here is: how far into "pre-foreclosure" are they? If the answer is "not too far", then the possibility of a short sale exists (though it may not even require a short sale, depending on what the current owners owe their bank relative to the $650k you plan to spend on the property). Short sales can take anywhere from 3 months to a year, so that should give you the time you need.

On a separate note...are you sure that's the house you're going to want to be in a few years down the line? With the income you're new employment will provide, you can certainly afford a lot more than $650k for your house, so, rather than move again in a few years, perhaps you should carefully consider what your mid-range housing needs/desires look like before you kill yourself to get into a house that you may not want after a year or two. Best of luck...
1 vote Thank Flag Link Mon Jan 27, 2014
Hi, yes the Physician loans (community solutions lending product) is now capped at 95% financing. Years past, the same product we could offer 100%. The exception to this is that you're looking to purchase a $650k home with $50k down, that excludes the community solutions loan because that is a conforming loan product maxed at $417k. Especially since Cleveland is not considered a high-cost living area according to the Federal Housing Finance Agency. That means you'd be looking for Jumbo financing which calls for a 20% down payment. Based on the number's you've provided, you were hoping to put less than 10% down. It's good that you've asked the questions early enough! Maybe by June you can come up with the add'l funds needed or can possibly get a gift from family to help cover what cash you may be short (for the down payment). Since this is a Jumbo loan product you'll more than likely need 6 months reserves (it would be 12 months reserves if you were first time homeowners). So please keep that in mind as well. If you might have add'l questions on lending, I'd be happy to help. Best wishes otherwise, Kimberly Lawson, Licensed Mortgage Loan Originator - Ohio only. Contact and licensing information can be found on my profile.
0 votes Thank Flag Link Mon Jan 27, 2014
Would love to be able to talk with you about our financing options. I work for Bank of America and my main focus is the physician loan, with the mayo clinic here in MN as well as the university of MN residency program. as far as financing goes, we can use your new income and close 60 days prior to starting your new job. Plus we have the 5% down option as well. if you would like to talk about our program or want more info, please call me at 952-985-4317, Email is Mike.Wolle@bankofamerica.com.
0 votes Thank Flag Link Mon Jan 27, 2014
Definitely a scenario to closely monitor and get more information on. You will want to go over all your financing options with a lender to make sure you're exactly where you need to be and with the right program/loan. The home itself will need to be monitored as far as the pre-foreclosure. It's possible the owner is behind on payments and will catch up. They may try a short sale or it may go into a full foreclosure.

You will need to stay on top of the property to see where it's headed. In the meantime, I would definitely look at other options/homes so that you're prepared either way. Getting your financing secured first is the best thing to do, then you're ready to go with this property or any other. Best of luck to you and if you need assistance, I'd be happy to help!

Cecilia Sherrard
0 votes Thank Flag Link Mon Jan 27, 2014
First! Congrats on your accomplishments...I know it's a long hard road with many sacrifices made along the way so making another one now doesn't set well. (we just completed this process with my son) It's my understanding that physicians qualify for these special loan programs for 5-10 years beyond their residency. I would recommend that you check this out for accuracy.

Is this home a "short sale?" If so, it's possible that you could plan on an extended period for your closing just because of this. It's known that these types of sales require more time and a higher level of patience for buyers. It's possible that you may not be too far off your anticipated target date for qualifying.

Have you met with a lending agent to process these plans? If not, I would recommend that you begin there. I'm sure the lender isn't going to want to lose you as a dependable customer so they may be able to offer some flexibility for your situation.

Is your present home on the market to sell? This is another consideration that you may wish to consider. The lender may have needs with this but they can comment on this. So if you don't want to lose this one, I would begin with your lender to find out where they stand on your plans.

Good luck,

0 votes Thank Flag Link Mon Jan 27, 2014
If the home is in pre-foreclosure than a bank does not own it yet. Foreclosure is the tool banks use to take the home bank. Pre foreclosure is a VERY general term. While foreclosure is taking place, the home owner is still the owner, most owe more than the home is worth and some may try a short sale but wont have time to go through the process because they waited too long. Once a bank does take it back, they usually do sell homes with any contingincies. They want it closed within 30 to 45 days. You should start with a buyer agent who can assist you with finding out where this home is in foreclosure, can it be sold and can a contingincy be put in place. If it is in foreclosure, the seller may not have that many months before they lose it. the buyer agent should be able to help you with a local and trusted loan officer who can then assist you with the mortgage,.
0 votes Thank Flag Link Mon Jan 27, 2014
Jim has provided you excellent advise. Also suggested was the issue of timing when buying distressed homes. The bank will do what ever the bank will do according to the banks calendar. This has been the source of incredible frustration for those who choose the distressed purchase option.------- You will find it essential to call a REALTOR who has experience is buying and SELLING distressed real estate. The REALTOR need to know what occurs on both sides of the transaction. --------- In your VERY SPECIFIC SITUATION, your best results will be to work with ONE REALTOR to get the process started on both sides. The bank may require a second REALTOR to be involved and if so, let your REALTOR appoint one who also knows the process. -------- Financing is certainly available with low or no down payment. Connect with a local lender ------- the hardest decision will be when to place your existing home on the market and how that will influence the rest of the plan. ------ You could end up selling your existing home and the bank refusing to cooperate...or the seller / owner refusing to cooperate....then you need to go with Jim's plan B...have another home ready to act on.
Annette Lawrence, Broker/Associate=======
Remax Realtec Group----------
Palm Harbor, FL ---------
0 votes Thank Flag Link Mon Jan 27, 2014
Good morning,

All very good questions! What I would recommend is to speak to a good loan officer and real estate agent that can assist you. The loan officer will need to review your situation, income, credit, etc to give you full answers to your questions. A real estate agent can assist you with locating good loan officers to speak with and help you place an offer on a home, negotiate and guide you through the process.

I'm local here, and I would be very happy to help you get your questions answered, get you the home you want and make it a smooth process. I invite you to contact me anytime.

Dominic Picione
Keller Williams
0 votes Thank Flag Link Mon Jan 27, 2014
All great info posted here. Most importantly: probably not the best thing to do to post your personal finance info onto any website. Just a precaution.
Flag Mon Jan 27, 2014
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