Hard Money / Private Lender for owner occupied in PA?

[Marni L.]

So, here's the situation:

Our current income is around 250k+ via W-2 now, and was about 200k-ish  in 2015 and previous few years. In October of 2015, we rented a house. After a couple months, the owners put it on the market, to close either after our lease was up, or work it out with new owners. We really liked the house and wanted to buy it ourselves, but needed another year to save more for a down payment. After speaking with them, they took it off the market and we entered into a rent-to-purchase agreement.

Just months after moving in, in Dec of 2015, my husband had a horrific accident, hit a deer and cartwheeled his SUV "multiple times", requiring a month in ICU, 3 months in a wheelchair, multiple surgeries and months of rehab and a walker; about 9 months out of work originally following the accident which was most of 2016 and about 6 months out of work each in 2017 and 2018 for follow up surgeries. We blew through the house down payment we had saved since he was not working. And, saved nothing additional. We had no short term/long term disability or anything like that...so, we lived off our savings and my earnings, which were also less than normal because I was off a lot as well during this time!

As of roughly April this year, we're now "back to normal". I'm earning 70k via W2 at my primary job- a large international logistics company, about 18k at a second job I've had for years at a small business, and prob another 12-15k via 1099 for side consulting work I do. My husband is healed up and back at work full time, W2, making $95 an hour as an IT Architect with a large, national IT service provider.

We had extended the purchase contract last year to this October. Now, here it is almost October, and we can't qualify for a conventional loan because our 2017 and 2018 tax returns are so low. (in the 60k and 80k range) We also don't have a down payment saved up except for the extra we paid the seller, about 25k. We'd love to extend another year but having done that once, we don't think they will entertain it.

We both have online access to our paychecks for our primary positions and can give a prospective lender temporary access to verify both employment and income for themselves, above just viewing paystubs we scan/fax. (my 2nd job doesn't have online access, but, I have the traditional paystubs)

Purchase price is 675k. Down payment credit of 25k from the seller. We had an appraisal done at time of contract which was I believe 695k (I'll have to pull it out, might need to have it re-appraised anyway since it is a couple years old...)

Our last ditch effort is to seek a private lender, or hard money bridge lender. A bridge for 18-24 months so that we could save more to put down and file a couple "good" tax returns. Or, if a private lender offers us a decent mortgage option, we wouldn't need to refinance and they can earn a nice return on a 25 year mortgage. 

We are open to any unconventional/non-traditional options as well. If you have any, please let us know so that we can consider them.

We don't want to lose this house, but, don't think the sellers will extend another year. Maybe they'd extend to spring so that they didn't waste effort trying to sell over the winter... but they had put it on the market when we entered into the purchase agreement, so they have already been very lenient, not only taking it off the market and entering into a rent-to-purchase agreement in the first place, but, then extending it a year. 

Any ideas?

[Jerry Padilla]

@Shaun Weekes

Thank you for the mention! Absolutely on your suggestions on how to structure this deal and explain the situation. 

@Marni L.

There maybe a portfolio option for you that I am aware of. Since you are above conforming limits, with this option, you are required to have a 5% down payment. So you are close to having that. There is also a 9 month reserve requirement. This can be stocks, bonds, retirement funds, cash value whole life insurance. You can ask for up to 3% sellers concessions. 

The other option is conventional and a second mortgage. This would be 95% LTV. With a 6 month reserve requirement. You can ask for up to 3% sellers concessions with this route.

Can you save up some more funds prior to closing? Also you can ask the seller to pay up to 3% towards closing costs and prepaids to help With closing costs. Maybe you could increase the purchase price slightly to compensate for this, difference? Both of these options are a 43 back end ratio. 

Also, when you go to apply for the mortgage there will be an appraisal done so no need to pay that now.