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What would be my best option to obtain a mortgage with a foreclosure?

Here is my situation and I am hopeful that someone here can provide a positive solution - 

A few years ago, my wife had lost has job.  By the time she got another job (2/09) after about 3.5 years, our finances and credit were in shambles and we had used all kids' college savings, etc and had to file for bankruptcy in August of 2009.  After this, things were okay until our second child started college and it is impossible to get a parent loan with a bankruptcy so I started paying college bills by delaying mortgage bills.  At this point, our current house is in foreclosure (and worth about $150,000 less than what is owed on it) and the bank informed us on Wednesday that they won't modify the loan and while I have advised my attorney of this, I am looking at the following options if this house is foreclosed:

1. Rent a home?, OR
2. Buy a home under my daughter's name? OR
3. Is there a way for me to get a mortgage loan?

Any honest and accurate feedback would be greatly appreciated.

Thank you.


  • December 02 2013 - Farmington
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Answers (7)

Profile picture for BartGabe
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  • December 06 2013
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All three options are possible.  However, #3 cannot occur until the foreclosure is completed.  In addition to the financing options mentioned in previous replies, there are also intitutional portfolio lenders, not hard money, who will offer mortgages after foreclosures without waiting periods- but they will require substantial down payments (25% or more).

Good Luck.
  • December 02 2013
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Most loans will require some type of waiting period. Since your house is still in foreclosure the waiting period hasn't even begun yet. The waiting period can be anywhere from 1-7 years. Depending in the loan you choose, the lender, the circumstance of the foreclosure, and your financial record during the waiting period. Either way, you will still have to wait at least 1 year.

For buying under your daughter's name, does she have income, credit, debt, or assets? If you get a mortgage under your daughter's name that means only her finances will be looked at. Your income or credit will not be counted as hers. Well I hope this gives you some insight. If you have any further questions feel free to contact me.

Good Luck!
  • December 02 2013
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You could look at a lease option type of deal if you're really against just renting, but you'd need at least 3 years from the date of foreclosure (or short sale if you can sell it that way).

The best move may be to find an affordable rental, save money and get your finances in order, and then 3 years from now be ready to go.

I have quite a few clients who have gone through this kind of thing and we're in process of going over their credit, income, assets and budget and putting a plan in place so they'll have the credit history, score and assets needed to buy a home when their wait is up. I'd suggest you get in touch with someone at least 18 months before your wait is up so you can make sure you on track, and to help you make any adjustments necessary.

  • December 02 2013
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Based on the information above it appears you will most likely qualify for a hard money loan, which will have a high down payment and a high interest rate. I believe FHA will allow you to buy owner occupied after 3 years. Your best best will be to rent for a few years. I would stay in your current home and save money for as long as possible. Any further questions feel free to contact [Hotlink removed by Zillow moderator. Please see our Good Neighbor Policy.]
  • December 02 2013
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Option #3 is out for awhile.  Renting is always an option.  #2 is possible if your daughter can qualify on her own for a mortgage and her intent is to occupy the home with you.  Otherwise it would be considered a rental property and she would have to come up with 20% down payment and none could be gifted to her.
  • December 02 2013
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You will most likely only qualify for hard money loans which will have high down payments and high interest rates.

I believe FHA will allow you to buy owner occ after 3 years.

Your best best will be to rent for a few years. I would stay in your current home and save money for as long as possible.
  • December 02 2013
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