YES!!! It Is Possible....A home for us again!

[TheBrokeCouple]

Wow,

It's really hard to imagine where we came from in November of 2007 to this point. We were drowning in debt, afraid and consumed with our financial burdens.

We filed our BK in 4/08 and were discharged 7/08. We also let our home go back in forclosure as well. It was not an FHA loan.

We moved to an apartment in 3/08 and have worked hard to clean up our credit scores, limit our credit usage and began the "impossible" process of obtaining a loan for a home mortgage. I made dozens of phone calls, to multiple brokers and mortgage companies. I was turned away what seemed like a million times. I got into contact with our local USDA office and was referred to a local broker known as a "fighter" for those with special financial circumstances. This was in May of 2009.

Since that time we have had to provide every piece of paper we own regarding our financial picture, letters of explanation, bank statements, tax records, and even documentation that we do not owe any medical bills. Our loan was initally denied by underwriting who said that they wanted our Medicaid approval to come through for our children before they would consider approving our loan...it came through the very next day.

All in all, it has been an amazing experience. Finding the right broker has been the key to our success. He's a wonderful guy who has gone to bat for us more than once to help us secure our mortgage.

We have been approved for a USDA home loan at 5.5%, zero down, no PMI insurance. We are closing December 1, 2009.

I just wanted to share our success with the rest of you and encourage you to keep your dream alive. Don't take no for an answer...move on and find someone who CAN and WILL help you. Your work in rising from the ashes of bankruptcy is pivitol as well. A credit score of 620 or more is required, good work history, solid savings patterns, low debt/income ratios, on time payments of rent and other debts...etc.

If you're serious, and determined..it can be done.

We were approved 15 months after our BK discharge when everyone else said it would be impossible until 3 - 5 years from now.

Blessings,

The Broke Couple - Indiana

10/2007 - Our "oh crap" moment

4/2008 - Filed Chapter 7 BK

7/2008 - Discharge

11/2009 - Approved for USDA home loan! - Set to close 12/09

[dub]

Great story.......congrats!

[AngelinaCatHub]

Yes it can be done. 'Hub

[Tom_Mi]

Great story! We'll be going thru this next year. If your broker knows any 'kindred spirits' in Michigan, feel free to pm me their name.

[RK05]

What part of the country are in you?

Isn't USDA loans for "rural" sections of states only?

[Tom_Mi]

I checked the usda website and they say in their FAQ section that you must be 3yrs post discharge.

How did you get around that?

[oldhack]

Well, I hope the OP will let us know that answer definitively, but I'd guess their loan came via the USDA Direct program -- which actually loans government money -- rather than from a USDA-guaranteed loan from a private lender.
The latter requires more or less standard qualification, while the direct program only states the borrower cannot be able to obtain a mortgage loan elsewhere, and should have "reasonable credit histories".

http://www.rurdev.usda.gov/RHS/sfh/brief_rhdirect.htm

[Tom_Mi]

Well, I hope the OP will let us know that answer definitively, but I'd guess their loan came via the USDA Direct program -- which actually loans government money -- rather than from a USDA-guaranteed loan from a private lender.
The latter requires more or less standard qualification, while the direct program only states the borrower cannot be able to obtain a mortgage loan elsewhere, and should have "reasonable credit histories".
http://www.rurdev.usda.gov/RHS/sfh/brief_rhdirect.htm

That makes sense..and is disappointing. I make a tad too much for the direct, but could qualify for the guaranteed.

[TheBrokeCouple]

Our broker explained to us that the rules can be "bent" in some cases. He works a lot with people who have had troubled financial histories. He heard my story and understood that we had a lot of other issues that went into our bankrutpcy. We have two children with Autism and were drowning in medical debt. We did also incur some debt on our cc's just trying to make ends meet at the end of the month and paying on our debt.

We live in Indiana and yes, this loan required us to live in a specific area of our county. There were specific income guidelines. We could not make any more than $70,000 per year, I think. We were also required a credit score of 620 or better as a middle score. We wanted a more "country" like setting to live in anyway. We are just 10 minutes away from all of the things we know and love where we are living now.

I think if you can do the USDA rural loan and can find a home that you can qualify for the loan, go for it. No PMI allowed us to get a little bit more home and keep our payment in check each month.

Our broker also explained that he could likely get us around the 3 year waiting period after the sale of our home to go with an FHA loan if we wanted to try this summer. We just did not want to wait, and wanted to live in a more rural area anyway. Why pay the extra PMI if you don't have to. We are now able to maintain our substantial savings in the bank for those unforseen fixes that come with home ownership. We hope that we have learned our lesson as we do not want history to repeat itself.

I just want the lesson learned here to be that it CAN be done. The media and nay-sayers will tell you it's impossible. It's not...if you're serious and determined to do what it takes.

Good Luck!

[dm415]

So was it a direct or guaranteed loan?

[TheBrokeCouple]

We got the guaranteed program. The direct program is a government subsidized program that is for people who have very low incomes. Our loan is going to be serviced by a traditional lender, Chase Rural Housing is one of them that they use. I'm not sure exactly who will be carrying our loan to begin with. I'm sure it will be sold right away.

Yes, this is a more traditional loan program, but they are able to bend the rules if you have the right broker, and if you are willing to do the work neccesary before applying as I discussed in my earlier posts.

Thanks!

[mom2three09]

That's awesome!! Congrats

I'm in Indiana too (Tippecanoe County). Our chpt 7 will be discharged as of tomorrow and we're putting our current home on the market in 2 wks. We hope to eventually get approved for a USDA rural home loan. Our current loan is FHA & we absolutely hate the PMI (and will never go with a FHA loan again because of it). We've never been late on our mortgage payment (3 yrs), but right now our mid scores are only about 613 so we realize we still have work to do even if we can get approved before the 2 yr mark. We realize we may very well have to rent for the next yr or two, but hope that we can make the USDA loan happen before then. The broker we used before really worked wonders for us so we're hoping he can work his magic for us again

Thanks SO much for sharing your story... you've really given us hope!

[newimges]

Congratulations! Great news.

[Mi Bankruptcy]

wow.. that is cool

[SubPrimeME]

Congrats! We are waiting to have 20% down, get some skin in the game!