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Second FHA Loan Possibilites, or Conversion Question

Hello, all.

I have found a few posts on here similar to what my wife and I are facing, but each had specific details that don't exactly match our current situation.  So here's ours, hoping that someone could provide some advice:

We bought our first home just outside of Atlanta, GA via an FHA loan back in June of 2006. In 2009 we decided to move back to the Seattle, WA area near our families.  As you can imagine, since we bought our house in 2006 ... the price had all but bottomed out by the time we moved out of it.

Since it wasn't really possible to sell at that time, we decided to rent it out while trying to weather the housing market storm.  So since around April of '09 until now we have had it rented out through a management company ... more or less the rent and the mortgage are a wash.  The current tenants just signed a two-year lease in July of '11, so they are there for another 1.5 years or so.

What my question is, what is the best path for us to take as we look to buy a home here in Seattle within the next couple of years?  

Unless there's something I don't know, I don't think we'll be able to sell our first house and break even, or better, anytime soon.  And it's not really feasible for us to come up with a 20% down payment for a conventional loan w/o PMI.

My wife and I both have good credit (720 and 750), and minimal unsecured debt (will only have a $250/mo. car loan and about $15-20k in student loans left).

I've seen some people say that it IS possible to get a second FHA under certain circumstances ... would this be one of them?  Or would it be a better idea to try and convert the first FHA to a conventional loan (I know now that it this was supposed to be done when we moved out of it).  Or, should we just leave that one as an FHA, and buy they new house on a conventional (if there is a way to not put down 20%, and not have a fat PMI cost involved).

Thanks!
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March 01 2012 - Seattle
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Answers (4)

Best Answer

Hello,

It may be possible to buy in Seattle with an FHA loan again. OR you could go conventional with 3-5% down and Private Mortgage Insurance. FHA just announced that thier mortgage insurance costs are going up so conventional may be the best way to go anyway.

There is also the Fannie Mae HomePath program which allows you to buy with as little as 3% down with no mortgage insurance and no appraisal required. These are Fannie Mae owned homes that may be a little rough but are great bargains. Go to HomePath.com to check it out.

Since you have had your Atlanta home rented out since 2009 we may be able to use rental income but I would need to talk to you about your situation. Every loan is different and FHA goes on a case by case basis.

Good documentation and letters of explanation will be required no matter which way you go.

If you want to talk further just click on my name and either give me a call or sshoot me an e-mail.

Best regards,

Doug

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March 01 2012
Sounds good,

For now start a file(s): (pdf if possible)

copy of the lease agreement on your Atlanta property
2010 and 2011 tax returns, all forms and schedules
2010 and 2011 W-2's
keep a rolling 30 day history of paystubs
keep a rolling 2 month history of bank statements
keep a rolling quarterly or 2 month history(howver you get the statements) on retirement/401(k), mutual fund, assett accounts (any account you might pull money from for a down payment/closing costs or to show assetts in reserve)
photocopy of your drivers licenses 
Blood type  (kust kidding)

Doug
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March 02 2012
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Thanks for the response, Doug.  It was very helpful.

I will definitely keep your contact info for when we are ready to look more seriously at this.  At this point we are just in the baby stages of thinking about purchasing a new home here in Seattle.

Thanks again!
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March 02 2012
No you can only have a second FHA loan if it was due to a job transfer.  But yes you can  buy a house with 3-5% down either conventional or using the Homepath program. 
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March 01 2012
 
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