“Hi Gary. I bought a San Diego home a few years ago worth $400K and put a $80K down payment. Right now I’m trying for a modification and still waiting for their decision. …My question is can we still buy a house that is much lower than our current home but one that we can afford? Do you think we can get approved if we have a down payment? Please advise. Thank you.”
That’s a great question. Two possible challenges come to mind:
First, check your FICO score. I’ve heard—but haven’t confirmed—that some banks will ding your credit for even applying for a loan “mod.” Not sure that’s legal. (Doing a loan mod usually damages your credit as banks mark it “not paid as agreed”). And if you’re behind, of course you may have credit damage.
Second, lenders are tough on qualifying right now if you own a home and are buying another in the same area. They want to be sure you don’t “buy and bail,” i.e. buy the new home and stop making payments on the old one with an upside down mortgage.
I suggest you call my preferred lender to see if you qualify. Give me a call or shoot me an email for his info.