How do I go about purchasing a new home when our current one is underwater by $150K?

lenadavis17
Contributions:1

We are looking to purchase in 4-5 years? Can we keep it as an investment property and if so, what do kind of financial stability do I need to show to the banks to get another mortgage? To complicate things even further we already had to short sale and foreclose on several investment properties around the country.

Thanks of the advice.

Flag content

January 25 - US

E-mail Share RSS

Answers (4)

Steve Withrow, "SteveMDDCVA"
- 5.0/5.0
- (2 reviews)
Contributions:22

In 4 to 5 years, assuming that you do not have any additional short sales or foreclosures, your credit will have rebounded dramatically from what it is now. As of now theres a 3 year waiting period and then you need to qualify for the loan based on your credit score and income. Lenders won't consider rental income on a property as applies to your DTI ratio typically if theres no equity in it.

Have you tried renegotiating the current mortgage on your house?

Flag content

January 27

Ofe Polack, "Ofe Polack"
- 5.0/5.0
- (10 reviews)
Contributions:1418

Since you mentioned that you already have had a short sale and a foreclosure, you become a high risk to lenders. Instead of giving you advice here, you should meet in the privacy of a mortgage broker's office and plan for the future. In the next 4-5 years the mortgage sector will be undergoing For now, learn from the reasons that prompted the short sale and foreclosure and start fresh, when you are ready Good luck!!!

Flag content

January 26

Adam B. Manville, "CapstoneBroker"
- 0.0/5.0
- (no reviews)
Contributions:53

In all honesty, the mortgage guidelines 4-5 years from now will most likely be completely different than what they are currently. At this point in time, your debt-to-income ratio would need to cover the full payments on both your existing house (not counting potential rental income) and the new house. In most cases, that is difficult for buyers. The short sale/foreclosure history would be another issue that needs to be addressed separately (based on the dates they occurred, how they settled, etc).

Flag content

January 25

Caveat Emptor
Contributions:500

you'll need a signed lease of at least 6 months at the time of closing. that income, plus your income has to carry both mortgages comfortably.

at that point, its up to factors beyond your control. right now, banks won't give anyone a mortgage who is downside on their home, but that may change in the future.