Mortgage Specialists - Need Help

[enron29]

So my wife and I have run into somewhat a wall, and are trying to make the best decision for the future of our family. We recently received a 60 day notice to move out of our rental that we have been in for almost 5 years now. Supposedly the owners need to move back in. Shitty timing considering that my wife is almost now 7 months pregnant. Also, we most likely need to switch schools for my girls since all the rentals around us in the same area are $400-$600 more per month and/or not practical for our family.

My wife and I have been saving hard for down payment to buy, but have hit a snag. Long story short, we had a short sale 3 years ago (exactly). Given this fact, I guess we don't qualify for a traditional loan, but would be eligible for a FHA loan. The kicker with this is the loan limit with the FHA due to different counties.

In Orange County, the limit is $650k, which is fine since all the homes are that much anyway, but we just can't afford the homes in Orange County on my single income in the areas we are looking (schools being most important for my girls). So we were looking at buying back out in Chino/Chino Hills where we lived before, but the problem is the FHA limit is $356,500. This is really handcuffing us. We have roughly $75k to put down, so adding that to limit gets us to about $431,500. But the homes we were hoping to buy are in the $480-$500 range. This is not an issue for mortgage payment, but just a matter of qualifying for the loan due to the limitation.

Is there any way possible to get around this limitation? What options do I have? Obviously, we were hoping to rent at our current home one more year, save a little more, and buy in a year when we are eligible for a traditional loan. But having to move is forcing our hand, and obviously we would rather buy rather than moving into a rental for a year, then buying and having to move again.

Any help/insight is appreciated. I know there's a lot of smart savvy guys in here, so I'm hoping something can come out of this. Thanks and sorry for the long verbiage.

[Nihilation]

Have you tried talking to your bank or other lender? Have a credit union?

[enron29]

Originally Posted by Nihilation

Have you tried talking to your bank or other lender? Have a credit union?

We are members of School's First Credit Union. Have not discuss with them since they are the ones we had short sale with. Don't think we could get another loan through them.

Discussed with another lender. We tried submitting letter of extenuating circumstances, but that was denied since it did not show prolonged deficit of funds on our taxes over the past 5 years. But it doesn't reflect what actually went on since we tried renting the house out, and I made a job switch as well as my wife. We made responsible moves to try and support the issue rather than just dumping.

[gtron]

Originally Posted by enron29

So my wife and I have run into somewhat a wall, and are trying to make the best decision for the future of our family. We recently received a 60 day notice to move out of our rental that we have been in for almost 5 years now. Supposedly the owners need to move back in. Shitty timing considering that my wife is almost now 7 months pregnant. Also, we most likely need to switch schools for my girls since all the rentals around us in the same area are $400-$600 more per month and/or not practical for our family.

My wife and I have been saving hard for down payment to buy, but have hit a snag. Long story short, we had a short sale 3 years ago (exactly). Given this fact, I guess we don't qualify for a traditional loan, but would be eligible for a FHA loan. The kicker with this is the loan limit with the FHA due to different counties.

In Orange County, the limit is $650k, which is fine since all the homes are that much anyway, but we just can't afford the homes in Orange County on my single income in the areas we are looking (schools being most important for my girls). So we were looking at buying back out in Chino/Chino Hills where we lived before, but the problem is the FHA limit is $356,500. This is really handcuffing us. We have roughly $75k to put down, so adding that to limit gets us to about $431,500. But the homes we were hoping to buy are in the $480-$500 range. This is not an issue for mortgage payment, but just a matter of qualifying for the loan due to the limitation.

Is there any way possible to get around this limitation? What options do I have? Obviously, we were hoping to rent at our current home one more year, save a little more, and buy in a year when we are eligible for a traditional loan. But having to move is forcing our hand, and obviously we would rather buy rather than moving into a rental for a year, then buying and having to move again.

Any help/insight is appreciated. I know there's a lot of smart savvy guys in here, so I'm hoping something can come out of this. Thanks and sorry for the long verbiage.

I'm far from being a mortgage specialist but I feel the need to spew misinformation anyway.

Huntington Beach has those affordable housing homes (they call it something more fancy than that) but I think it's a 30 year commitment. Something like you have to pay the full 30 years if you leave early. I really have no idea how it works and my info could be all hearsay. I've seen nice homes near Main St on redfin and alike that I'm not allowed to purchase because I'm outside their limits. It potentially sounds perfect for your single income and they have great schools.

Then again, if it sounds too good to be true then it probably is. I'm sure there's many catches to those things.

Good luck to you and your family!

[Alfisti]

What's a short sale?

[Banana Hammock]

Originally Posted by Alfisti

What's a short sale?

It's when you sell for less than what you owe.

[RickFLM4]

You may want to consider continuing to rent for a while longer in a less expensive location, such as where you are home shopping / previously lived.

[Alfisti]

Originally Posted by duck fat

It's when you sell for less than what you owe.

Ouch.

[Alfisti]

Originally Posted by RickFLM4

You may want to consider continuing to rent for a while longer in a less expensive location, such as where you are home shopping / previously lived.

Yeah i'd think about renting in the shittiest place you can afford and saving more of a deposit too but he has kids in school, which really complicates things.

[ASBSECU E93]

Originally Posted by enron29

We are members of School's First Credit Union. Have not discuss with them since they are the ones we had short sale with. Don't think we could get another loan through them.

Discussed with another lender. We tried submitting letter of extenuating circumstances, but that was denied since it did not show prolonged deficit of funds on our taxes over the past 5 years. But it doesn't reflect what actually went on since we tried renting the house out, and I made a job switch as well as my wife. We made responsible moves to try and support the issue rather than just dumping.

If you have re-established credit with your credit union, or have paid all other trade lines as agreed - go back to your credit union and start there.

[Flying Ace]

Response related to the forced eviction of your current rental. This sounds like a Ellis Act eviction.

I know here in NorCal, specifically in SF, you can negotiate an impact cost for you to move out, even for Ellis Act evictions. So say, you estimate it'll take you 3-months of temporary housing to get into your new house, you can try to negotiate that as part of your exit for the landlord to pay you.

For more information, you need to contact your local government housing department, lawyers or the internet to see if you can negotiate and whether they are obligated to pay for it.

Hope this helps!

[Flying Ace]

On your question regarding the FHA conforming loan amounts....

There are other conforming loan amounts you likely will qualify for, even with your 75k down. Try asking lenders for Super-Conforming (at least $417k and up to $625k limit) or certain Jumbos or Jumbo-ARMS. San Bernardino county's super conforming is currently set at $417k, though based on the rough numbers you have here, you need at least another $8k-$9k down to get to $417k.

http://www.freddiemac.com/singlefami...onforming.html

Also, you need to set aside another $5k or so if you are required to fund escrow (possible, also if you're in a flood zone), have reserves and/or to pay for origination and settlement fees. (The Loan Estimate disclosure will state all these fees). This amount you need to set aside will be less if you decide to have the fees roll into a higher interest rate.


Yeah, your rates will be higher for those types of loans, but if you MUST buy a $500k range house, that's your only option at this point without putting more down.

Remember to shop around. I cannot emphasis this enough. Go to every bank and credit union you can find. Even ones you don't have accounts at, sometimes it's as easy as opening up a $50 checking account to get a loan at a certain credit union.

BankRate.com will also help steer you towards an appropriate loan product based on your data.

Last resort, you can work with a mortgage broker...he/she will have access to multiple loan products, but make sure you select the right broker, i.e. a reputable broker, and remember, his/her broker compensation fees are negotiable.

Again, I cannot emphasize enough to shop around.

[W Cole]

Personally I would wait a year or two to buy based on the market right now. Smart capital is forecasting a correction in 2017. Chino will get hit harder in a recession vs. other areas in Orange County.

Add in the short sale and limited down payment and it really makes sense to wait.

I would try to put down 20% and most lenders will want at least a couple months of reserves. Some conservative balance sheet lenders like Wells Fargo want 12 months.

[W Cole]

Originally Posted by Flying Ace

Response related to the forced eviction of your current rental. This sounds like a Ellis Act eviction.

I know here in NorCal, specifically in SF, you can negotiate an impact cost for you to move out, even for Ellis Act evictions. So say, you estimate it'll take you 3-months of temporary housing to get into your new house, you can try to negotiate that as part of your exit for the landlord to pay you.

For more information, you need to contact your local government housing department, lawyers or the internet to see if you can negotiate and whether they are obligated to pay for it.

Hope this helps!

San Francisco is very unique with their rent control, etc.

It sounds like he has a month-to-month lease, which can typically be terminated by either party with 30 days notice. Or whatever notice period stipulated in the lease.

[Flying Ace]

Originally Posted by W Cole

San Francisco is very unique with their rent control, etc.

It sounds like he has a month-to-month lease, which can typically be terminated by either party with 30 days notice. Or whatever notice period stipulated in the lease.

Ellis Act evictions is governed by state law. What I'm saying is, b/c this appears to be such an eviction, landlord is bound by this law's notice requirements and associated "rellocation fees", if the tenant is eligible. He should be able to get between $7k to $10k from the landlord.

Here's some info:
http://hcidla.lacity.org/Relocation-Assistance
http://www.yourlegalcorner.com/artic...d=142&cat=land

[W Cole]

Originally Posted by Flying Ace

Ellis Act evictions is governed by state law. What I'm saying is, b/c this appears to be such an eviction, landlord is bound by this law's notice requirements and associated "rellocation fees", if the tenant is eligible. He should be able to get between $7k to $10k from the landlord.

Here's some info:
http://hcidla.lacity.org/Relocation-Assistance
http://www.yourlegalcorner.com/artic...d=142&cat=land

Interesting. Good thing that doesn't apply to anywhere I do business. I love liberal CA but some of this stuff is getting out of hand.. Couple key points:

1. OP is not in Los Angeles County, I think OP is in Orange or Riverside county.
2. This only applies to RSO properties.
3. This only applies to multifamily properties or single family homes operating as boarding houses.

[enron29]

Thank you guys. All great points to take note. As of now, the current plan is to find a rental near the area we are looking to buy to get our daughters enrolled in the schools so they don't have to switch again in the next couple years.

As far as the relocation fees due to conviction, not sure if we could pull this off. I sent letter to owner stating our circumstances with my wife being pregnant asking for another year lease then we would be gone, but haven't heard anything. I don't necessarily believe the property manager is really doing his job. Technically we didn't really even have a formal month-to-month agreement, more like our 24 month lease agreement ended and they just stay there as needed.

I am concerned about buying too early. Obviously I don't want to repeat the same thing as before. I understand Orange County holds better value, but areas and what we can afford don't necessarily add up with the schools I want to send my daughters to. It's a very difficult dance. If it were just my wife and I, we would make this work, but when my kids are involved, it makes it very difficult.

[///WORK-F36]

Originally Posted by enron29

Thank you guys. All great points to take note. As of now, the current plan is to find a rental near the area we are looking to buy to get our daughters enrolled in the schools so they don't have to switch again in the next couple years.

As far as the relocation fees due to conviction, not sure if we could pull this off. I sent letter to owner stating our circumstances with my wife being pregnant asking for another year lease then we would be gone, but haven't heard anything. I don't necessarily believe the property manager is really doing his job. Technically we didn't really even have a formal month-to-month agreement, more like our 24 month lease agreement ended and they just stay there as needed.

I am concerned about buying too early. Obviously I don't want to repeat the same thing as before. I understand Orange County holds better value, but areas and what we can afford don't necessarily add up with the schools I want to send my daughters to. It's a very difficult dance. If it were just my wife and I, we would make this work, but when my kids are involved, it makes it very difficult.

You're in a tough spot here. FHA or VA is really your only option. I've been in mortgage for 15 years now, and the confirming rules on short sale are very tough to get around. Do you or your wife have any current or previous military experience? If you like, you can PM me and I can get into this in a little more detail with you.

[Flying Ace]

Originally Posted by W Cole

Interesting. Good thing that doesn't apply to anywhere I do business. I love liberal CA but some of this stuff is getting out of hand.. Couple key points:

1. OP is not in Los Angeles County, I think OP is in Orange or Riverside county.
2. This only applies to RSO properties.
3. This only applies to multifamily properties or single family homes operating as boarding houses.

Originally Posted by enron29

Thank you guys. All great points to take note. As of now, the current plan is to find a rental near the area we are looking to buy to get our daughters enrolled in the schools so they don't have to switch again in the next couple years.

As far as the relocation fees due to conviction, not sure if we could pull this off. I sent letter to owner stating our circumstances with my wife being pregnant asking for another year lease then we would be gone, but haven't heard anything. I don't necessarily believe the property manager is really doing his job. Technically we didn't really even have a formal month-to-month agreement, more like our 24 month lease agreement ended and they just stay there as needed.
.

Again, as I stated, these relocation fees are mandated by STATE law. OP didn't give more details, but it sounds like he lives in a single-family home or condo and thus this eviction appears to be covered under the Ellis Act law. Each city may have RSO laws, but LA County has a law that says that ALL evictions are still subject to certain RSO eviction laws. I simply pulled some consolidated information on the Ellis Act eviction from LA County "organization" in case OP needs a local org to talk to. Alternatively, he can just read the plain language law and reference all the statutory codes for himself for his applicable county (I'm just trying to help here)

Also, as I understand my local SF law, the tenant definition is also pretty loose, and may also apply to Orange County. You can be categorized as a tenant even if you're not under a written contract. So don't let the contract technicality hold you up. As I recall, as long as you paid your rent and you've stayed in that unit for at least X consecutive days, you're considered a tenant under the legal sense. It's that simple.

It is illegal for your property manager or landlord "ignore" your request for relocation fees if you know you are a "eligible" person under the law. They are just plain violating state law and can be fined and subsequently sued for it.

It appears that it's in OP's best interest to talk this through with local county housing departments who may offer free advice or one of the links I provided was a local tenant rights/property attorney, who will charge for a consultation fee.

IMO, $100 paid for a consultation fee to clarify his possible qualification under Ellis Act and get $7k-$10k of relocation fee in return is a good return on investment and time.

[UncleWede]

Did you look at getting a house where you meet the conforming, and then transfer the kids to another district on your own dime? If the wife is a few months from birth, and you are trying to qualify on your income alone, it sounds like you plan for her to stay employed as a mom for a bit of time. She is then free to drive the kids to school. In 3-5 years, just as the youngest moves on to public babysitti.. . I mean public school, wifey goes back to a paid job and you move to your dream house.

Although I wouldn't exactly give her a car like Lups had. . .

[aktif8]

I used to own a mortgage bank, but got out Pre crash, so I'm way out of date.

One potential alternative I've seen, if possible. Iirc, fha allows for gift funds as part of a down payment. If a family member can gift you, you can then unofficially pay them back, since you mention monthly payment isn't an issue..?

[kprocivic]

Originally Posted by aktif8

I used to own a mortgage bank, but got out Pre crash, so I'm way out of date.

One potential alternative I've seen, if possible. Iirc, fha allows for gift funds as part of a down payment. If a family member can gift you, you can then unofficially pay them back, since you mention monthly payment isn't an issue..?

As long as the gift can be verified. The gifter, would need to be able to show where that money came from.