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Old 09-13-2010, 05:24 AM
 
Location: Raleigh, NC
2,541 posts, read 5,484,098 times
Reputation: 2602

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Here's the situation:

Due to a huge amount of medical bills a couple years ago (I had an unexpected and very complicated pregnancy and didn't have maternity insurance, so no ongoing health problems) we had to file bankruptcy. We are only a month outside of bankruptcy and have been looking for a lease option of owner finance home so we can get settled. Last week we found the prefect house, in the exact area we want to be in. It fits our unique needs which will be hard to find even in this buyers market. So we want to buy it.

Of course we can't get financed through a traditional bank right now. Our income will allow us to pay off the house in 4-6 years as long as the interest rate isn't too terribly high. We would prefer a 15 year mortgage that will allow us to make extra payments without being penalized. Penalties for refinance would probably not be a big deal, since we don't intend to do that.

We have 11 years on the job and had excellent credit before our medical problems.

Thanks for any input.
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Old 09-13-2010, 06:34 AM
 
Location: Plano, Texas
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There are no subprime lenders left. You might be able to find a hard money lender but the interet rate will be near double digits and they will charge substantial fees up front.
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Old 09-13-2010, 06:53 AM
 
Location: Raleigh, NC
2,541 posts, read 5,484,098 times
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Thank you, Victor.

Actually, near double digit interest rate would be acceptable since the principle to income is so low. In our figuring we assumed a 6% rate for the first 2 years, then 10% rate for the duration of the loan. This scenario allowed us to pay it down in 5 years.

Can you recommend any lenders that would do this?
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Old 09-13-2010, 08:42 AM
 
Location: Plano, Texas
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You will have to find a hard money lender. This is usually a private person lending their own funds thus they make their own rules. What state are you looking to buy in?
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Old 09-13-2010, 09:03 AM
 
Location: Raleigh, NC
2,541 posts, read 5,484,098 times
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I'm in North Carolina.

I have called dozens of hard money lenders this morning that I found through google. It appears that most of these only do commercial lending.

You know, this seems to me to be a niche market that private investors might want to consider. It would seem that many buyers with a short period of circumstantial poor credit would be a good credit risk despite the medical bills, death in the family, etc. etc. that caused the issue. This is a different class of people than those who partook of the subprime mortgage boom, trying to finance more than they could really afford. I know in our circumstances the hospitalization and subsequent bills caused us to make many changes. We changed all of our insurance policies and now keep an emergency fund in the bank that equals the amount of out of pocket expenses we would need if we were in an accident or suffered an unanticipated illness. We also purchased term life insurance so that if I or my spouse died the other one would not be left with the bills. Before this happened, being young, we always assumed things like that wouldn't happen to us. So now we're prepared...and we want to buy a house. The payment on this house would only be 12% of our income on a 15 year term. We are well-educated, responsible and plan to pay our mortgage down quickly.
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Old 09-13-2010, 11:35 AM
 
Location: Plano, Texas
1,673 posts, read 7,023,592 times
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I will ask a few contacts of mine if they know anyone in NC.
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Old 09-13-2010, 12:17 PM
 
Location: Austin
7,244 posts, read 21,841,328 times
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Have you actually contacted a lender for potentially an FHA loan, or do you just assume you can't get financing the traditional way? Typically, under FHA, they don't count medical bills/collections against you. With that, if the medical bills are what caused you to file BK, yet you have "new" credit showing on your credit report, they look at the new credit more favorably and will ask for an explanation letter of what happened...

I suggest you talk with a traditional lender before you assume you won't qualify. FHA has never considered medical bills/collections as a negative.
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Old 09-13-2010, 01:02 PM
 
Location: Raleigh, NC
2,541 posts, read 5,484,098 times
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Victor - Thank you.

FalconheadWest - I have spoken to several lenders and they have all told me we need to be two years past the bankruptcy in order to get a mortgage.
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Old 09-13-2010, 03:29 PM
 
5,342 posts, read 14,158,268 times
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Quote:
Originally Posted by pegotty View Post
Here's the situation:

Due to a huge amount of medical bills a couple years ago (I had an unexpected and very complicated pregnancy and didn't have maternity insurance, so no ongoing health problems) we had to file bankruptcy. We are only a month outside of bankruptcy and have been looking for a lease option of owner finance home so we can get settled. Last week we found the prefect house, in the exact area we want to be in. It fits our unique needs which will be hard to find even in this buyers market. So we want to buy it.

Of course we can't get financed through a traditional bank right now. Our income will allow us to pay off the house in 4-6 years as long as the interest rate isn't too terribly high. We would prefer a 15 year mortgage that will allow us to make extra payments without being penalized. Penalties for refinance would probably not be a big deal, since we don't intend to do that.

We have 11 years on the job and had excellent credit before our medical problems.

Thanks for any input.
If you have a long standing relationship with a local community bank AND a large down payment (i.e. 30%) they might grant you a home loan.
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Old 09-13-2010, 03:55 PM
 
Location: Raleigh, NC
2,541 posts, read 5,484,098 times
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Quote:
Originally Posted by TimtheGuy View Post
If you have a long standing relationship with a local community bank AND a large down payment (i.e. 30%) they might grant you a home loan.
We use a large national bank, but have had our accounts for 20 years. I suppose I could talk to them and see if they would be willing to do something, although I wouldn't be able to save that much cash for a few more months.

Thanks for the thought.
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