Mortgage at this point in time

[rsteinbacher]

I have been reading all the great posts about getting a mortgage after bankruptcy. Problem is they all seem to be kinda old posts, so here is my quick story and question.

We where selling our house at the start of the national mortgage financial issue. We where paying almost 3k a month & wanted to downsizes to prep for kids and college. During that time, I had a heart attack and was out of work for over a month without short term disability. All medical bills where paid but with no income, we fast fell in to financial disrepair.

We filed for ch7 and are at this point 16 months out of our discharge. We have been renting during that time and our credit scores are both over 640.

Now... allot has happened since that time with the financial & mortgage market and I really would like to buy a home again. My questions are as follows:

Do I still have to wait the 2 years or are there any new programs to help me now?

With the market in the shape it is in now, will I have to wait longer that 2 years?

I heard that it is changing from 2 years to 3 years for ch7. True?

Any insight would be greatly appreciated.

Rob

[Flamingo]

There is no firm answer as to your question....a lot now depends on your job, income, creditworthiness and the problem that you have a BK on your credit reports for 10 years from the filing date - no matter what anyone says, it can and will hurt you during that period of time - some people more, some people less. The best thing you can do is speak to a broker about your situation. A good place to start for names is the attorney who handled your BK. If you do qualify for something, it will probably be FHA and you will also have to deal with PMI on at least the first five years of the payment whether or not you put any money down due to your risk factor. If you qualify for conventional, rates will probably be much higher than the going rate. The only way to find all this out is to test the waters...best of luck to you!

[BuckeyeGuy13]

Ditto to the above as that's the best answer anyone can give you. One thing you will need to consider is the timeline for a foreclosure is longer than the Chapter 7 discharge. I'm assuming, based on the fact that you're renting, that you surrendered your home.

If that is the case, even inside a bankruptcy, it is considered a foreclosure for underwriting purposes.

However, as Flamingo stated, we aren't going to know any better than a local mortgage broker. If there's a way to get you financed, they will know it - it's how they earn a living. Check with your local Better Business Bureau for referrals.

[HHM]

The timelines are HARD deadlines. You will not get an FHA mortgage any sooner than the timelines, 2 years from BK-7 discharge and 3 years from a completed foreclosure (note, the foreclosure timeline trumps the BK timeline, so if you have both a BK and a foreclosure, the foreclosure timeline will control). and the timelines are longer for conventional mortgages (Fannie/Freddie). Baring special circumstances (think, severe medical), you will not be able to get a mortgage within those time frames.

Thus, you would have to look toward non-conventional financing methods, i.e. hard money lenders etc, which I would NOT recommend; or find an owner willing to carry, do a wrap-around mortgage, or land contract.

[BuckeyeGuy13]

I have researched all of these since I dumped my house in my Chapter 13 and we needed a place to live. None of them seemed to be a better option than renting and looking to purchase sometime after my timelines were "up." We didn't have a huge down payment, which is needed in some of these cases, and we didn't want to take the risk of signing a binding purchase contract at this stage of our life.

In my opinion, this time out for us is giving us time to have the market settle, we can search where we really want to live, AND I don't have the HASSLE and EXPENSE of home ownership. Case in point, last week our driveway was sealed and that is covered by our landlord. Before that, there was something wrong with the garage door opener, not my problem. So on, so forth.

My point in all of this is that renting isn't that bad. I've seen HHM's previous posts and I agree that ownership isn't that great unless you're looking to be there for 20, 25, 30 years. So, that's what we're doing. We're renting from a great guy (another bankruptcy attorney, no less) and taking the time to find a place that we can retire in someday.

Sorry to be wordy. Hope it's helpful.

[DUMBAGAIN]

I agree with Buckeye. Renting really helps give you time to figure it all out and you don't have to worry about maintenance costs....I would someday like another home of my own, but for now and for some time to come, renting will be our best option.

Good Luck