USDA Mortgage requirements - Strategy in general

[laurannm]

I have been reading a lot on USDA mortgage and we appear to meet all of the eligibility requirements (income, location, credit scores, etc.) The one item I still have a question on is the house we currently own. It was IIB as part of a Ch 7 nearly 4 years ago, not reaffirmed but we are still making payments. Will this be a problem even with a USDA loan (i.e. do we have to let the house foreclose and season for 3 years after the sale before applying for a new loan)?

Also, I know this is a stretch but is it possible to file a quit-claim deed so that the title of our house only has my name on it (essentially remove my DH's name from the title), so that he can qualify for the USDA loan on his own?

We are very much upside down on our current home and there are next to no rentals available in the area, so I am trying to find a way to get out from our current house and get into something that makes a little more financial sense

Any help is appreciated!

[NoMoreCards]

Essentually what you want to do is known as a buy & bail. Search the internet using buy & bail as key words, you will see that many people are looking for ways to do just the same thing. The banks are very familiar with the tactics used by people trying to buy and bail, and they are against it. They will ask and want to know what you intend to do with the house you are living in. If you lie to them, that would be mortgage fraud. If you are honest, they will not loan you the money. It is a tough spot many home owners are in.

You might be best off to do a land contract with someone, or even find a way to pay cash for a house that has been foreclosed on, and work on improving the home without a mortgage. There are ways to do what you are wanting to do, without dealing with banks or commiting mortgage fraud. There are some wonderful houses, in great areas that are priced way below market value because they were foreclosed on. And everyone knows how market value is in the dumps to begin with. So there are many options available, make sure you look at them all.

Best of luck to you.

[laurannm]

Thanks. I had a feeling our options were limited

I don't know anything about land contracts. Are there any downsides to this approach?

[NoMoreCards]

I purchased a house many years ago doing a land contract and had no problems at all. I would be sure to have a lawyer look at all paperwork to make sure everything is on the up and up, but many people are doing them and not having problems.

[laurannm]

Thanks again...any thoughts on how to best search for land contract opportunities?

[tobee43]

http://www.bkforum.com/showthread.php?66156-Buy-vs.-Rent-An-Update&highlight=land+contracts

this a thread that may help you understand what and how a land contract works. you actually can find realtors that may work with you to find some properties. i know in nj where we did one for my daughter, i drew up the contacts but we found a broker to handle the deal.

best of luck!

[OregonMom]

It might be a long wait to get a USDA mortgage, we applied for the direct loan and qualify but we have been on the wait list for 1 year and just got a letter stating the wait was going to be at least another 6 months.

[tobee43]

It might be a long wait to get a USDA mortgage, we applied for the direct loan and qualify but we have been on the wait list for 1 year and just got a letter stating the wait was going to be at least another 6 months.

did they say why?

[laurannm]

Curious about the wait list myself, this is the first I have heard of it

[Dondeuce]

USDA does two type of loans a direct and a guaranteed. With a direct loan the USDA actually funds the loan, and with a guaranteed they just back the loan and the lender funds it. There is a waiting list for direct funding but if can get a guaranteed loan you will not have to wait. Your income will determine which loan you qualify for.

[nomoneynomore]

We went through USDA direct for our home loan last year. (July 2011 in Kansas) We applied in April and were denied because hubby hadn't been at his current job long enough. THEY called us back in June and said we were approved!! We found a home we could live with and signed a contract in late June. All our paperwork showed a closing date about 3 months out. We closed on July 26th! We had an absolutely amazing experience with them. Just this month we went back to them and were approved for a loan to put in a storm shelter & have that in the works. Contact your local USDA RD office and ask them how long the wait is & get any inside info. Good luck!

[HHM]

You won't be able to do buy and bail with USDA or any other normal mortgage.

As was already suggested, the only option would be non-conventional or off book lending, e.g. land contracts, hard money, etc.

[tobee43]

You won't be able to do buy and bail with USDA or any other normal mortgage.

As was already suggested, the only option would be non-conventional or off book lending, e.g. land contracts, hard money, etc.

good point hhm.

but congrat to you nomoremoney, if you are happy that is all that counts.