3/27 arm 12 mos. after chapter 7?

[jakers]

Hello, new here. Our chapter 7 was discharged 6/07, and we have started to rebuild our credit. We are in California and wanting to buy a home shortly and take advantage of the amazing deals on homes in our area right now. We have been told that though it is possible to get an FHA loan after 12 mos. it is difficult depending on your circumbstances. I spoke to a broker today who said that he can do a 3/27 arm 12 months after the discharge, since our FICO's are about 680 right now (we were never late on anything before the bk and have recovered fairly well) though the loan would of course be subprime. We would need to move anyway in July to be closer to our jobs, and would like to just buy again. Would it be setting ourselves up for failure to do the 3/27? I really do not want to move our kids twice if I don't have to. We have nice income and next to no debt. Any input would be appreciated!

[CindyLou]

There is NO TELLING what the market will do! Taking on an ARM right now could spell disaster. You will have no way out if you need it! You need to talk to a few direct lenders. Go to the FHA website and call some FHA approved lenders. They can make execeptions to the 24 months rule! 12 months after discharge they can do a FHA loan if they can show that you have shown responsibliity and have a good debt to income ratio. It may take a couple of calls to find a lender willing to make the the effort to get the exception or even know about the exception rule!

Again, stay far far away from that ARM. The housing market is still declining, which means that if you get into a house now, then chances of refinancing in the next year or two are very slim!

[jakers]

Thanks, for your input Cindy! I have to wonder how strict they are on the 24 months for an FHA? We had excellent credit all the way until we filed, and we had to file because of a failed side business. We have since cleaned all our credit up and obtained some new cc's.

[chucko]

Absolutely avoid that ARM like the plague. Do not even consider it, just walk away. If you can't get a fixed, you don't need to own a house right now, especially in a declining market like CA.

[imaloser]

Avoid the ARMs at all costs ! You would be a very good candidate for the FHA/FHASecure program - start saving some money - homeownership should be considered a "goal" - not a dream. FHA will require a piddly 3 to 5% down which will afford you an excellent fixed interest rate at around 5 or 5.5%. The market has not bottomed out yet - there is still a lot of room for prices to drop which will put yourself in an even better position to buy.

[JeepMom]

FHA is really hard right now. It took us almost 2 months to close.

[I want out]

We are in California and wanting to buy a home shortly and take advantage of the amazing deals on homes in our area right now.

What's the rush?

Why do you want to buy early in the downturn cycle?

[HHM]

Don't do it.

There is absolutely no reason to be in a rush to buy at this stage...interest rates are going to go down, home prices are still going down.