Does anyone have experience with a non qualified mortgage after Chp 13?

[Quicke23]

Hi all,

I was recently discharged from a 100% payback Chp. 13 (2 months ago) and now in the market to buy. Have virtually 0 debt and my income has jumped significantly since the start of my BK. I'm working with a close friend who is a mortgage loan officer and he seems to think we could do a non QM with 10% down for a jumbo loan in CA. Of course I am expecting higher interest rates; but I want to get in a new home asap and refinance in 2 years to a conventional loan. Does anyone on here have any experience going this route? If not, I may be a guinea pig and I will share my experiences. I believe this is different than a hard money loan with outrageous interest rates and fees.

[sophieanne]

I've never heard of that. Good luck and keep us informed!!!! (The only thing I've ever been told, by many lenders, etc.) is you have to be discharged for 2 years before they'll even work with you.

[despritfreya]

I've never heard of that.

Here is a decent discussion of "qualifying" and "non-qualifying" loans.

http://nonqualifiedmortgage.com/

Personally, I would advise waiting until one can obtain a more traditional loan. What's the rush anyway? Housing prices are at the top of the bell curve right now.

OP's comment about refinancing in two years is exactly what caused the mortgage crisis. OP, you do not have a crystal ball. Two years from now you simply may not be able to refinance and will therefore be stuck with presumably, a higher interest rate/higher fee loan.

Des.

[Quicke23]

I've never heard of that. Good luck and keep us informed!!!! (The only thing I've ever been told, by many lenders, etc.) is you have to be discharged for 2 years before they'll even work with you.

Thank you and I will keep you updated!

[Quicke23]

Here is a decent discussion of "qualifying" and "non-qualifying" loans.

http://nonqualifiedmortgage.com/

Personally, I would advise waiting until one can obtain a more traditional loan. What's the rush anyway? Housing prices are at the top of the bell curve right now.

OP's comment about refinancing in two years is exactly what caused the mortgage crisis. OP, you do not have a crystal ball. Two years from now you simply may not be able to refinance and will therefore be stuck with presumably, a higher interest rate/higher fee loan.

Des.

Well, since I don't have a crystal ball, can you tell me what else you see in yours in addition to that the housing prices are at the top of the bell curve right now?

Who knows what the rates will be like in 2 years, the "higher" rate with the loan my LO is seeking, may be less than the traditional in 2 years. It's all unpredictable; but all I know is that they are running out of room to build in my area and my wife has found her ideal new home, my family has grown and my income throws me in a tax bracket that could truly use some write offs.

When I said refinance, I meant refinance to a traditional "qualified mortgage" with typical interest rates-not cash out into a loan I couldn't afford, etc.

I value all your opinion and I have thought about waiting 2 years for a traditional loan; but I am willing to pay the price, if available and reasonable.

The loan would require 10% down, so I am wondering if this topic hasn't been touched upon, from what I can see-is that it's not typical to have funds for 10% down right out of Chp. 13 BK?

Will keep you posted!

[despritfreya]

Well, since I don't have a crystal ball, can you tell me what else you see in yours in addition to that the housing prices are at the top of the bell curve right now?

Since you asked. . .

I have been in this business for nearly 30 years. In that time, the market has collapsed as follows:

1987-1989 - Savings and Loan debacle - RTC takeover;
1997 - 2001- dot-com debacle/Enron; and
2007-2008 - mortgage meltdown.

I think there was one more but you get the picture - every 8 or so years. Since all of this is cyclical we are at the top of that bubble now. In each "crisis", bks went way up and I made a very good living. I suspect I will be doing so again very soon.

When I said refinance, I meant refinance to a traditional "qualified mortgage" with typical interest rates-not cash out into a loan I couldn't afford, etc.

And if your home has dropped in value such will not be possible. This is what happened during the mortgage meltdown.

I value all your opinion and I have thought about waiting 2 years for a traditional loan; but I am willing to pay the price, if available and reasonable.

And such is ok if you understand the risks and are willing to live through them.

The loan would require 10% down, so I am wondering if this topic hasn't been touched upon, from what I can see-is that it's not typical to have funds for 10% down right out of Chp. 13 BK?

You might want to look at some posts at www.loansafe.org. Please be careful. This site is not a "non profit" as the .org would suggest. Don't buy into anything without fully investigating. But. . . it does have a lot of useful information.

Des.

[Quicke23]

Des.- thank you very much for your comments and feedback. Much appreciated. This should be an interesting next few months/years. Many in here have helped me by sharing their experiences and I hope I could do the same in some way.

[sophieanne]

Des = tjhank you for all the information you provided in this post.

[bcohen]

As interest rates rise, house prices must necessarily come down, because at any income level, the amount which a borrower can finance decreases. I also concur that housing prices are at the top of the curve, and will probably drop off in the not-too-distant future.