I’d like to buy a foreclosed house in my neighborhood, what loan products are available?

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I bought my first house August of this year and I have 2 roommates helping me with cost. I make about $ 7000 gross a month at my full time job and about $ 1050 a month from my 2 roommates. My credit score is 789 and I have no debt other than my mortgage. I’d like to buy another house in my neighborhood and rent it out but don’t have much cash for another down payment.

3 Comments
  1. Reply
    kemperk
    April 29, 2011 at 9:04 pm

    i did not state where you live but I suggest waiting before you
    buy anything else…….unless you can save 50%—or
    obtain a county tax foreclosure prop.

    YOU can get an 80% new ltv loan on the new home–or perhaps
    even 100% if you are moving into it.

  2. Reply
    godged
    April 29, 2011 at 9:43 pm

    Because this will be considered an investment property, you are going to need some down, probably at least 10%.

  3. Reply
    alex c
    April 29, 2011 at 10:15 pm

    As a Mortgage Loan Consultant by trade I can see that this may be a difficult road for you. First thing is that banks right now are not lending on a second home. Second, Mortgage insurance companies are not insuring homes without a very large down payment and without mortgage insurance you cannot sign title to your home. Third, if the home you are trying to purchase is a smaller home or lower in price than your current home, you must state in writting to the lender why you are down sizing and it must be proven, ( Loss of Job, Medical Condition). Things like that. Finally you must also state to the bank that your first home will be the one that you will be renting and that the second home will be your primary residence. After closing you can do what ever you want, but in a declining market like the one we are all in, without a large down payment, FHA or Conventional Mortgages will not allow you to buy. You need to have 20% Equity in a home (Price of Home $ 100,000 down payment $ 20,000). Without a large equity barrier from falling home prices, mortgage insurance companies will not insure you in these tough econimic times. Last of all, a high credit score will not help you in this situation. You need to have a least three open lines of credit. A car, a credit card and your home mortgage are minimun to show you have good payment history. Banks have tightened their wallets and you must show beyond a doubt that you can afford both homes.

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