Combo Loans on First Mortgage?

Deal Score0

I’m trying to figure out any way possible to buy a home so my husband and I can get out of our current situation, which is very bad! Last year we qualified for a $ 160,000 loan, but both agreed that we don’t need that much house, which is quite a lot in our area. Our biggest problem is that we have a lot of small bills and the payments are using up our extra cash. Our total debt including car payments is only $ 26,000. My credit score is low due to a past divorce that was just settled (but now all my old debts are paid) and my husband’s score is 700 and improving. Of course, we wouldn’t be able to save more than a few thousand for a down payment. We qualify for an FHA loan. Is it possible to obtain a combo loan with a first mortgage if you are able to buy the house for quite a bit less than FMV? I’m just trying to find a way to “consolidate”.

  1. Reply
    May 1, 2011 at 5:28 am

    Nobody will loan you more money than what a place is worth and what the place is worth will typically be the lesser of the appraised value or the purchase price. Even if you are buying a house way below FMV, the bank will assume FMV is your purchase price, nonetheless. Also, nobody will loan you money for your house and personal debts in one loan.

    Its possible to get a really, really good deal where you structure it in such a way that you get cash back at settlement – but this is tricky and nearly impossible in todays market (unless you really know what you are doing).

    So, no you can’t really do a combo loan. Maybe you could buy the house anyhow and just pay the mortgage and other debts off at the same time. This is an ok idea if buying the house wouldn’t cost you much and would lower your total housing expense (so you could pay more towards you other debts faster). Still, it may be best just to pay off the other debts and then buy a house.

    Best luck.

  2. Reply
    May 1, 2011 at 5:28 am

    Honestly, you should really have 20% down before you buy a house. If you buy too much house and end up losing it, because you have no equity and can’t make the payments, it will prevent you from buying another house anytime in the future. If you buy with 20% down, even if you find that the payments are too much for you, you should still be able to sell the house and walk away without destroying your credit. Many, many people are in financial ruin right now, because they rushed to buy.

    Start setting aside the difference between your current rent and your future mortgage payment. This will do two things. First, it will help you see if you can comfortably make the mortgage payment without falling behind on other bills. Secondly, it will allow you to build up a nice down payment. If you can’t do this, then you are not ready to buy.

    P.S. I also think housing prices are still dropping so waiting a year or two will ultimately allow you to get more house for less

  3. Reply
    May 1, 2011 at 5:35 am

    WAIT. Save up, until you have at least 3% down payment. Work on paying those bills off, month by month, paying on time, paying at least double the minimums. With those debts from your divorce paid off, and 6 months of good payment records, reduction of debt, you should be good to go this fall or next spring.

  4. Reply
    No Trouble
    May 1, 2011 at 5:49 am

    Hi Michelle,

    Real Solutions Investors Inc. specializes in real estate and assists those having issues with acquiring a mortgage. They might be able to help you with your situation. Visit them at Good Luck!

    Leave a reply

    Register New Account
    Reset Password