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Is it possible to buy a second home, current home upside down, and with bad credit?

We were looking for a bigger house but felt stuck in our current home. We've never been late on our mortgage, car, CC payments but medical collections really dinged our credit for the worst. We realize we need a large down payment and could probably do $20k-$25k down. Is it still possible to buy a second home? We don't plan on short selling, but thinking of renting it out. I guess I need some expert advice on where to begin. Thank you.
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March 09 2012 - Lents
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Answers (8)

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If you are converting your primary to a rental and don't have 25% equity, you will have to qualify for both payments as has been previously stated. If your credit score is high enough and you repurchase with an FHA mortgage before April 1. (Actually have a case number before 4/1) you may be able to purchase even with the medical collections. After 4/1 any collections over $1000 will need to be paid off. 

How much are the collections for and what is your credit score?
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March 09 2012
If you can put 25% to 30% down, you are employed and you don't have late payments on your credit besides the medical bills a private lender that is licensed for owner occupied lending in your State would probably be interested.  The upside down home shouldn't be an issue if you are current because it's not your fault the value went down.  We make loans like this if the bad credit is explainable.  Unlikely that you will be able to qualify for conventional though.  
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March 15 2012
No.
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March 10 2012
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No way. You're a three time loser--bad credit, upside down, looking for a second home. Nothing says buy and bail to a lender faster.
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March 09 2012
As long as you have the cash to pay for it or enough that the seller will carry a contract, no problem. If you are looking for a conventional loan, probably not.
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March 09 2012

Where to begin...   I would have a loan officer prequalify you to see exactly what your debt ratio and credit scores are.   You may have to go FHA with low credit scores.

You will have to be able to qualify for both payments (new home and old home) and the underwriter will not allow you to use rental income on the old house to qualify since you don't have 30% equity in the home.

You most likely would have to pay off any collections as well. 
 
Even if you did a short sale, you would have to wait several years before you would be eligible for a new loan.

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March 09 2012
Your best answer will come from a good mortgage broker.  If  you'll email me I'll give you two good ones. 
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March 09 2012
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Not knowing the credit score, I would say no because you would need to qualify carrying both mortgages. A lender could not consider the rent in this situation.

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March 09 2012
 
Related Questions
Is it possible to buy a second home, current home upside down, and with bad credit?
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Latest answer by WestmooreGroup
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