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Overseas contractor (DoS employee) trying to buy first home in Florida, FHA loan / occpuancy?

Overseas contractor (DoS employee) trying to buy first home in Florida, FHA loan / occpuancy?

I am an overseas contractor working in Iraq, trying to buy first home in Florida. My contract is for a year, however this company was awarded the 5 year contract total. Looking to buy first home in Florida, got pre-approved prior to deployment. Now I am running into problems with regards to occupancy. I have R and R every 4 months or so, a month at a time in duration. I am single and not married. Want to buy this house so when I get back it will be mostly (if not all) paid for. Need to go FHA route since I do not have enough credit for conventional loan. This was also a reason to buy a house, make steady payments and build more credit. I have good credit, just not enough of it. Silly me, I never acquired a lot of credit cards or debt. I am trying to get loan through Wells Fargo, since that is where my money is (close to $50k which alone is a third of this house). Will this be possible? I am working with one mortgage guy but want to do some research on my own, so it's not all on him. I would like to be informed. I had found the house and put an offer in, but now there seems to be problems...
  • December 13 2011 - Tampa
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Answers (28)

Yea, I think you are going to have problems.  Most lenders will require that you occupy your home at least 50% of the time, and 3 months is obviously well short of that.  I've done these kinds of loans, but not for single people.  If you had a wife & kids it probably wouldn't be an issue, but that's not your situation.  That being said, guidelines are open to interpretation, so I'm not saying that you absolutely won't find a lender to do this for you.  I believe it's highly unlikely, but maybe…

Do you have a relative or a really, really good friend that wants to buy a home as well?  If they would occupy the home you could be the non-owner occupied co-borrower.  Just an idea.

  • December 13 2011
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I do not know your entire situation and I do not originate loans in Florida. My suggestion is to find a portfolio lender in the Tampa Bay Area. Portfolio lenders use common sense lending.

I have funded loans for primary residences and 2nd homes through portfolio lenders for folks that are employed under contract, such as, in the entertainment and professional sports industries. Two were out of contract and waiting for the next acceptable contract.
 
Having a contract of employment from an employer that was awarded a contract by our Government's Department of State says a lot about you. You have passed one of the most rigorous back ground investigations that are applied for positions involving high security situations. Good luck.

Happy funding, Rudi
  • December 13 2011
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Profile picture for jedirye
Thank you both for your advice thus far. Unfortunately, I do not have a family member or close friend that would co-own this with me.I am giving it some time right now, to do some research... It is certainly a tricky situation, and if I were married this wouldn't be an issue it seems. It just seems unfortunate I have money, good credit, and the house in mind. Just the occupancy issue is a problem.
I have been doing some research with regards to maybe the possiblity of a "rental property" type loan, seeing as how I cannot feasibly occupy this residence in the fashion that seems so commony required by more common loans. I am okay wtih a larger down payment (20%) if required as well.

I am waiting for my lender at Wells Fargo to get back with me. Trying to do some researcha nd pursue other routes if possible. 

Thank you so much.
-rye


PS: You are right, my background check for this DoS position took 7 weeks and a LOT of information, especially since being overseas prior as well. I appreciate you acknowledging that.
  • December 13 2011
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If you can put 20% down (perhaps ever 10% down) you might be able to do a 2nd home loan using conventional financing. It's essentially an owner-occupied loan except it doesn't have to be your primary residence.  Your problem is you will probably need to have manually underwriting and come up with another credit source or two.  (Rent, utility payments, etc. may work; you may already be aware of this.)    I'm not sure what the mortgage requirements and rules are there in Florida, so I can't say for sure.

  • December 13 2011
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If you can put 20% down (perhaps ever 10% down) you might be able to do a 2nd home loan using conventional financing. It's essentially an owner-occupied loan except it doesn't have to be your primary residence.  Your problem is you will probably need to have manually underwriting and come up with another credit source or two.  (Rent, utility payments, etc. may work; you may already be aware of this.)    I'm not sure what the mortgage requirements and rules are there in Florida, so I can't say for sure.
  • December 13 2011
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Jedirye  Instead of trying this through the usual suspects, I would suggest that it might be smarter to try either the State Department Credit Union, or USAA who are two "banks" who are more  accustomed to these sorts of issues.  Even if they don't want to directly work with you on the mortgage, they will know banks that will do these sorts of things.

Best of luck!
  • December 13 2011
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Why sugar coat?  No way will this be approved FHA and if any lender did they should loose there ability to lend FHA!  The FHA loan program is for Owner Occupants Only.  At best this home would be considered a 2nd or vacation home (even though you do not own a primary residence).  You will only live in it when you are on vacation.

If you cannot qualify for a 2nd or vacation home it will not happen.  The answer would be very different if you had a wife and kids that would be living in the home while you were deployed.
  • December 14 2011
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Sorry about the dups.  The post didn't appear so I tried to re-post my comments.  In any case, good luck with your search.
  • December 14 2011
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You are welcome -rye. If you cannot find a portfolio lender in Tampa for a primary residence. Ann and Bob also gave you suggestions. I am certain you are not one to give up on your objective and will pursue all options. Good luck.

Happy funding, Rudi
  • December 14 2011
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Profile picture for jedirye
Hey all,
Thanks for the information. After incesantly searching around on the internet, the outlook is not looking great.

I have another scenerio that I could throw in, and I'm curious if it would help my chances with the house:
I have a very close friend in Florida, that if I had to, would be able to help me out with regards to occupancy. I have known them for years, and trust them as well. Just that type of person. They own no other homes. I would not be completely against putting their name on the house. The problem is? No job history right now for them and I'm pretty sure his credit is alright to fair. I have read about having co-borrowers and whether their job history and whatnot would play a role. Would this be possible??
To be honest, I can understand lenders not wanting to mortgage out an empty house. It would not (easily) be maintained. I am wondering if this "twist" could help me out. I have to look at the FHA guidelines so I can maybe stick with FHA this way.

Thank you so much.
  • December 16 2011
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Profile picture for Bert Pope
Good luck with finding the right lender.
I have one suggestion for you with helping your credit.
If you have a friend or relative with excellent credit and they were to issue an additional credit card for you in your name off their credit card it will piggy back off of their credit and make your better. 
  • December 16 2011
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That might work if you can prove a long-standing relationship with this person (like someone you would have in your wedding party, godparent, etc.)  If you can do this, then FHA with you as the non-owner occupied co-mortgagor.  You would have to qualify to carry the full payment + any debt that your friend has.
  • December 16 2011
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Profile picture for jedirye
Bert- my credit isn't really the problem. It's right around 700 or so by myself.

Bob- I have looked into this, and I think you are referring to the Kiddie Condo FHA. It's meant for parents and students or other blood relatives, but it also includes the long-standing relationship. How would you prove a long-standing relationship? Could a fiance be considered?

I was already pre-approved for the FHA with regards to my income and credit history, and he has no debt. I don't see why this would be such a problem... I just would have preferred doing this on my own but this wouldn't have been completely out of the question, obviously if it would even be possible.

I believe there are conventional loans that require less lines of credit but I'm wondering if my employment location would still play a part in their decision making as well........

Thank you all for the input. Sometimes I am wondering if this is just becoming impossible.

  • December 16 2011
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Actually FHA's issue is making sure you are NOT doing an equity share transaction.  To be a non-owner occupied co-mortgage they really want a relative, so a fiancé would work.  All lenders are different, and some are more anal than others as far as what documentation they want.  When I've had this type of situation in the past, in addition to a detailed letter I have used: very old photos, letters & birthday cards that refer to the person as "my other mom," baptism records, etc. (I even used an old $5,000 bail bond receipt once.)  In your case I would probably use: receipt for the ring, church calendar showing date, registration for wedding gifts, etc.  Let me know where in Florida you are looking and I'll try to find you a good lender to work with.

  • December 16 2011
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Did you check with the State Department Federal Credit Union?  They have programs that deal with all the issues the overseas employees encounter.  For example, they're the only bank I know of who can write a car loan for a car that will be immediately shipped overseas.   I find it hard to believe they couldn't figure out a solution for you.

Ann Ryan
[contact information deleted by Zillow moderator.  Please refer to our Good Neighbor Policy]
  • December 16 2011
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I have to agree with Andrew:  As presented, it is highly unlikely a lender would jeopardize their FHA delegation to approve you for an owner occupied purchase.  FHA guides are very specific about occupying the property within 90 days of purchase (and some lenders may have overlays which reduce that time frame).  For instance, if your contract were ending in 90 days your mortgage consultant could provide evidence as such and it would probably past muster to accomplish your goal of purchasing owner occupied...however, that would necessitate you having employment in the area (the plot thickens, so to speak).

Further, all the speculation of finding someone to buy the property with could constitute potential fraud.  IMHO, a licensed Mortgage Originator suggesting ways to get around the primary residence guidelines is really in murky water.  Buying is with someone legitimately is one thing....adding a straw buyer is another (it is called fraud and it a Class C felony for both consumer and loan officer)

Why not just do the loan as a second home?  You won't need 20% down payment and there is very little, if any, rate add on from buying a primary residence.  In fact, i would structure the loan with a cover letter to the underwriter that you were really trying to buy the property owner occupied but recognize that you employment out of the country offers challenges that we are trying to overcome by requesting an approval for a second home.

I like Bob's comments about the documentation he has used to evidence a long standing relationship...that is Creative finance (and we have all used some pretty funny documentation as times); however, creative does have it's limits.  I would not risk my license on suggesting a client to find someone to occupy a property...and I would not encourage a consumer to risk the fines or prison time.  Just me...

.



 
  • December 17 2011
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Profile picture for jedirye

Once again, thank you all for the invaluable advice. It is difficult to read and process guidelines, protocols, etc. when it is not your field of expertise.
Deborah, I specifically thank you as well for the added information. My intention is NOT fraud, and even inadvertent, would like to steer clear of it.

I will be reading up more on second mortgages. It was my understanding that there would be the higher interest rates, etc. that went along with it which is what I was trying to avoid. I have the money to put 20% down, which I will read up on the pro's and con's of a higher down payment, etc. I obviously need to do more research. 

I think FHA is going to be completely out of the question, due to the residency/occupancy requirements. The person I had in mind to possibly coborrow with me would have been someone, when I come back, to start a life with, etc. It would not have been some joe off the street, of course.
But it appears that is potentially off the table regardless.

My realtor suggested a mortgage broker and that is who I am currently dealing with at the moment, to see my options. I am hoping this is possible because it would give me a good headstart, job motivation (it gets hairy here at times!), and great investment for my future in that area.

-rye

  • December 17 2011
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Nice Bob...Your OK with a straw buyer now!  Did you run that one by your underwriter?

  • December 17 2011
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If the co-borrower would not occupy the property, then FHA won't work.  Living there three months out of a year is not owner-occupied. 

You need to find someone that will do a 2nd home loan for you with your limited credit augmented by alternative credit.  You could also try the "add to someone else's credit card" method to get up to three lines of credit, but I haven't had that work too often lately.  Someone mentioned a local credit union, and that might be a good source.

  • December 19 2011
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Profile picture for jedirye
I did not know that the co borrower also had to live in the house. FHA is clearly out of the question.

My realtor passed my information along to a mortgage broker. I was informed today that it would be possible, but only with an "Investment" type mortgage. I will start a new thread in another section (perhaps "Mortgage Types") since this is definitely NOT an FHA loan... And I don't need to clog this FHA Forum up anymore.

I gotta see how bad the terms would be for an investment type property. Obviously there's more of an element of risk, hence higher rates, terms, etc. We'll see...

THANK YOU ALL.
  • December 21 2011
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If you are going to live in the property when you are on leave and not rent it out you should be able to obtain financing as a 2nd or vacation home. 
  • December 21 2011
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That would be my intention, to live in the house while on my RandR's, etc. My vacation could range anywhere from every 4-6 months and 30 days in duration each.

I have not talked to the mortgage broker yet. I think because of the holidays coming up. This is only what the realtor related to me after talking to him briefly today.

I would have liked to pursue possibly a vacation/second mortgage since this house will NOT be rented out... But I will do what needs to be done if I have to.
  • December 21 2011
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it's a 2nd/vacation loan...listening to realtors about financing options is a big mistake in most cases.  Don't take loan advice from a realtor and don't take real estate advice from a loan officer!
  • December 21 2011
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Andrew,  I absolutely agree.  However, I rarely see mortgage professionals offering up real estate advice on the 'net'.  It is, unfortunately, a common occurance on finance related questions.  I am beginning to think that certain agents are losing SIGNIFICANT earning opportunities because they are discouraging consumers in all the wrong ways and places!!  I find over 50% of the answers by agents, to financial questions, are totally incorrect.  Hey, we want to help them AND consumers...
  • December 21 2011
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Deborah,

I had a client that was already under agreement signed P&S home inspection done...comes into my office to look at their financing options for a renovation loan...Sub 530 Fico score.  I do not know any lender offering 203K loans with a sub 600 FICO. 

The time and money that was wasted by the broker, home inspector..borrower.  Not to mention other offers the seller turned down...property is back on the market. 

All could have been avoided if they required the borrowers to be pre-approved prior to submitting the offer!

  • December 22 2011
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I have not sought mortgage advice from the realtor. My realtor spoke to him before I was able to, and informed me on a few details because I was unable to get in contact with him. My realtor could not even inform me of the interest rate... I have yet to talk to him but the closing wouldn't be until February and the expected delay due to holidays probably plays a role as well with communication.

This allots me more time for research, regardless.

If I may ask a few questions here before I talk with him: what are the differences between an investment and a second/vacation mortgage. Obviosly they must have roughly the same residency/occupancy requirements. I would assume the investment type has an increased risk to the lender, and therefore higher intersest rates, etc. I am also wondering why it was not suggested to go with the second house mortgage over the investment, but becasue I have not spoken to him yet, these questions right now go unanswered. I will most likely be putting 20%-25% for the downpayment, so hopefully that may help me out with the higher interest rates...

Oh well, back to research. Thank you so much for all the help you guys have been. You truly must love your job, to go on forums and help people out you have otherwise no association with.

-rye
  • December 22 2011
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Rye,

Your assessment of the increased risk on investment properties is spot on.  The fact is that, if disaster strikes, and a consumer has to walk away from a property or not make a payment it is far more likely that they will do so on the investment property.

The increased risk is evidenced by a 2 point hit to loan to values at 75% or less, and a 3.25 point hit on 75.01 to 80%.  If you did not want to pay the points upfront (roll them into the rate), you are looking at approximately 4.75 for the lower and 5.00 for the higher loan to value.  Bear in mind, I only looked at the add-ons for investment properties.  There could be add ons for loan amount, property type, credit score...day of the week (okay, kidding on that one!), so rolling all the costs into the rate may be impossible.

Also, this is just a general quote of approximately where my rates are doing on 15 days.  Other lenders may have better, or worse.  Just assume a 1/2 to 3/4 point increase in rate for an investment property.  Second homes have little, or no add on to the rate/point structure; so you would definitely want to go in that direction if you can.

BTW, Andrew and I were referring to finance advice flowing from agents on the advice forums, not necessarily your agent.

@Andrew, That is nuts!  I have never understood why an agent would show a consumer A house without first finding out if there was any possiblity of the transaction coming together.  Frankly, I won't set appointment until I have done a pre-screen interview on the phone.  I don't need to drive all over Southern California to meet with an unemployed consumer with no money and a 500 credit score!!!
  • December 22 2011
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Profile picture for angelinafina
I'm jumping in here to ask some advice. Not sure how to start a new thread??? But this is somwhat related topic. I am working overseas for a US based company. Same profile, R&R's every 3-4 months for up to a month at a time. File tax returns and get the foreign income exemption for being outside the country. Income is $140K per year, over $200,000 in cash with ING. I currently own a home in Florida and live with my girlfriend of 17 years. Current Mortgage in my name, title in both mine and my girlfriend of 17 years (her credit is not good). Just put an offer in on house down the street that is bigger and a great deal (bank owned). We plan to move into the new house and rent the current home and wait to sell til the market gets better (it is $70,000 underwater). Offer was accepted with 20% down, in escrow, ING pre-approved, all documents presented and now underwriting just denied the loan due to owner-occupancy not meeting their requirements. They said it was because I was overseas. What do I do? It will be our primary residence and my significant other will live in it full time. She also has my full POA for the closing which has been accepted by the Title Company for a March 1st closing HELP??? Ideas asap...PLEASE... We need to get another lender quickly but will I have the same problem??? It seems so unfair that I would have to get a non owner occupied mortgage at a higher rate when I intend to have this as my HOME!
  • January 28 2012
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