Purchasing a house after short sale with extenuating circumstances.

Asked by JKM1972, Santa Rosa, CA Fri Dec 6, 2013

We are talking about purchasing a house in 2014. We had a short sale Sept 2011, its been over 2 years. We would probably qualify for FHA with extenuating circumstances. Our 1 year old son was diagnosed with cancer May 2011 and my wife basically stopped working and I could barely manage part-time hours, our income was reduced by approx 50% for last 2 years. Our son is cancer free for over 18 months, yeah! We are getting back to working more and our income is back up to pre-cancer. Our dilemma is FHA versus conventional 10% fannie mae with extenuating circumstances, which would be better. Our credit is already 760, we are getting our savings built up, but will barrow from our 401K if needed.

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Jessica Bate…, Agent, Beverly Hills, CA
Thu Dec 12, 2013
Sounds like you would qualify for the HUD program, I would recommend finding a broker or service to help you locate a reputable lender like, The Lenders Network. They will get you to a couple of lenders that have loan products that match up with what you need. Hope this helps!
0 votes
, ,
Sat Dec 7, 2013
Let's discuss your loan scenario in more detail.Contact me at 800 315 8803. My name is Bart and I have been in the mortgage business since 1987. I am happy to answer your mortgage questions, 7 days a week and review your loan scenario.

Until then, I look forward to hearing from you.

Bart Gabe - 800 315 8803
Lending since 1987
0 votes
Alexander Gr…, Agent, San Jose, CA
Sat Dec 7, 2013
I would be more than happy to help you with finding the product that best suites you. The best would be a 80/10 product to keep you out of mortgage insurance.

Alex Greer
Loan Officer
NMLS #1056079

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Randall Ortiz, Agent, Sacramento, CA
Sat Dec 7, 2013
Check with a lender or mortgage broker so they can go over your numbers. I can put you in contact with one if you still need it. 916-529-3707.

Glad to hear everything is better for you and your family.
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Chris Sanchez, Mortgage Broker Or Lender, Santa Rosa, CA
Fri Dec 6, 2013

All the agents on here have excellent advice for you. As many stated, your best bet is to meet with a trusted Loan Officer who can tell you what you qualify - and how soon - based on your unique situation and your future goals.

The agents here are gladly recommending their lenders, so you should be in good hands based on their referrals.

In trying to provide a direct answer to your scenario, it sounds like your main question is whether a 10% down payment loan would be better through Conventional or FHA?

It's hard to say that one is better than the other as it depends on whether your are 'eligible' for both programs. If based on your income and credit history, you only meet the FHA requirements, than that loan would obviously be your best option in the present time.

However, comparing the 2 loan programs side-by-side, FHA is more lenient on the credit and income guidelines, so more people would qualify for an FHA loan vs. a Conventional.

The other benefit of using FHA for a down payment less than 20% is that your loan approval and mortgage insurance are done in one shot. The insurance is through a government agency, whereas most conventional loans will be subject to mortgage insurance approval from a 3rd party company, such as MGIC. (Visit http://www.mgic.com) It is possible that the Mortgage Insurance company adds more loan conditions (requirements) on top of your loan approval which may potentially delay your escrow.

On the flip side, Conventional Fannie Mae loans offer less expensive costs than FHA - specifically with the mortgage insurances.

As you can see, there are many variables in your getting the right loan for your current and future needs. I wish you all the best in finding the right home for your family in the New Year.

Happy Holidays!

- Chris

Chris Sanchez
Author at PrivateMoneyBlog.com
Web Reference:  http://privatemoneyblog.com
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Yarrow Kubrin, Agent, Santa Rosa, CA
Fri Dec 6, 2013
First of all let me just congratulate you on your son making it through to a successful resolution with cancer my mom is also survivor my dad has cancer currently and I'm excited about changing societies paradigm so that they understand it's a disease that can be beaten.
You're absolutely corrected after a couple years your short sale will not be an impediment to you getting financing for home purchase.
And while conventional financing will certainly give you some benefits such as no mortgage insurance I think part of the answer to your question has to do with whether you have currently the 10% down you would need for conventional financing or whether you're planning on saving that money over the beginning of 2014. The reason why I say that is because if the value of the property that you're considering purchasing is going up quicker than your ability to save the additional down payment money in that case you would be better served by purchasing with FHA and then refinancing out of that loan later.
So some of it has to do with what your purchase price range is, whether you already have the 10% needed to acquire conventional financing, and some other factors that we can discuss if you call me. One of those factors is the unknown regarding interest rates. If rates go up you will qualify for less home because the cost of money is increasing. I would love to talk to you about this further so please call me on my mobile at 707-292-8400.
If you're not already working with the lender I have a list of a lot of great local lenders with the ton of experience under the featured partners section on my website
Web Reference:  http://www.yarrowkubrin.com
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Yarrow is right on all points. What I would add is, FHA is always .25% lower interest rate. The negative is the MIP (FHA's version of PMI) will be higher rate than than of conventional PMI
Flag Mon Dec 9, 2013
Terry Bell, Agent, Santa Rosa, CA
Fri Dec 6, 2013
So sorry to hear of your sons situation, and thank goodness children are so resilient! I work with many loan brokers and like to develop a team for my clients. I think any lender is going to want to sit down and go through all your finances and help come up with a plan for the best price range for you to target, and go over all the options with you. No lender is going to promise you anything without sitting down and seeing your situation. Best, Terry Bell, Realtor
Terry Bell, Realtor
CPS Real Estate
Santa Rosa, CA
0 votes
Karen Rose, Agent, Santa Rosa, CA
Fri Dec 6, 2013
There are some new loan programs for people with difficult circumstances ... do you have a lender? If not, please let me know and I can refer you to a few that you could choose from! Establish a relationship with a good lender and find out what different programs they have to offer, and compare them. There is bound to be one that works best for you! All the best to you, and I am so happy to hear your son is healthy. I agree with the previous answerer; that's the most important thing.
Karen Rose
Keller Williams
0 votes
Marie Young, Agent, Santa Rosa, CA
Fri Dec 6, 2013
So glad to hear your son is cancer free! Anything else is insignificant! As you know FHA gets you in with very little downpayment but you will have mortgage insurance. I believe you have to have 20% down in order to avoid that with a conventional loan. Check with your loan or mortgage broker which way would be best for you.

Marie Young

Coldwell Banker-Santa Rosa
0 votes
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