HELP!!! How do I get out of this house?

[adviceplease]

We filled bankruptcy and it was closed last June. We did not reaffirm the house or second mortgage but continue to pay. We decided to do this because to rent in our area was more than our mortgage. We have since had to buy 2 new cars so we were approved for those.

We are thinking of trying to find a way to buy a house that is about $70,000 less than the one we are in but double the size. I know there is a 2-3 year rule before lenders will finance someone. So what I need to know is how does getting a new loan work if you are still living in a home?

I'm assume that we are still considered to have the 2 loans as a debt. Besides just leaving and moving into a rental house for 2 years what are my options, would a loan while still living here be considered a 2nd home mortgage?

If we can get someone to co-sign do we have a chance at getting a $50,000 loan?

If not now can we do it at 2 years?

Help, I feel trapped in this house. It is not worth it for us to rent but I feel like I am throwing money away and just renting this house.

[bellows321]

I talked to a mortgage broker recently and was told that in no way could I get a mortgage less than 2 years post discharge. She also advised me that when you do go for lending that having 4 credit lines that are spotlessly perfect is essential to be approved. You've already got two vehicles that are being paid on correct? So that's a good start. I've read of people being approved less than two years out, but I'm sure you would need a big fat down payment of around %30. It shouldn't be too hard to come up with $15k. Of course, it looks like real estate in my home state of Michigan isn't going to recover any time soon, so you could rent for a year and a half and still find something reasonably cheap. Good luck!

[adviceplease]

What happens to this current loan when I try to get a new one, does it hurt my credit again? I talked to a real estate agent about a house and he said that it takes about a year for the foreclosure and we should stop paying early to save money. Is that true? What happens if I skip paying a few months and then make a payment, can they still foreclose?

[hopejones]

If you quit paying the mortgage, they can & probably will foreclose on the property. Then you will have to wait 3 years from the time they actually foreclose to get a new mortgage. The best case scenario for you would be to actually sell the home you are in yourself...I know that will probably be hard to do in today's real estate market. My hubby & I are in the same boat as you.

[adviceplease]

There is no way to sell it our self, it is about $70,000 underwater. At the 2 year mark do I have a chance to get an FHA and then walk away from the current house?

[dspii]

Ditto here....moving Reno, can't sell my home and if I walk, I'll have to wait 3-5 years before I can get another mortgage. Thinking of the lease option route and selling my home in time!

[adviceplease]

I'm not understanding what the difference would be walking away at the time of the bankruptcy or doing it later? I did not reaffirm and I was under the impression that because I did not and just keep paying the mortgage that I can walk away at anytime without it going against me a second time on my credit and they can't come after me for the balance of the first or second. Can someone explain to me how come it is 2 years at time of BK but an additional 3-5 if I walk later? I was hoping to try for a loan at the 2 year mark and get a new house and walk from this one.

[doudis2]

There is no way to sell it our self, it is about $70,000 underwater. At the 2 year mark do I have a chance to get an FHA and then walk away from the current house?

Unfortunately no; FHA will only give you a loan for your primary residence, so this strategy will not work either. To clarify, although you do not currently have a FHA (or any other mortgages I assume) loan that you are responsible for, you do have a home titled in your name. This is your primary residence. To try to get a loan to buy another house would be looked at as you trying to either "walk away" or as an attempt for you to get in the "landlord" business by renting out one of the homes.

So sorry many of us are, or have been in the same, or a very similar situation. My advice would be to stop paying now if you want out ASAP so that you can get the clock ticking. It's a crappy situation and I wish you the best of luck.

Our house (that we walked away from) just transfered title in 10/10 so our clock just started ticking as well. Our last payment was in 10/09, so it did take a year to foreclose. Only time is going to heal these wounds. Oh well at least we don't have to pay $248,000 (+ interest) for a house currently valued at $120,000.

[adviceplease]

I really do not know what is going on because the bank will not talk to us. We had a loan through the bank itself and we did not reaffirm and yes it is still in my name. What if we can find a place to rent to own with the option to buy in a couple of years? If we walk away and they foreclose can we get an FHA to buy the house?

I am stuck because the mortgage is less than renting but the basically if we walk away we are just renting it then because we will lose the money we paid in. I thought we could walk away at anytime. =(

[doudis2]

I really do not know what is going on because the bank will not talk to us. We had a loan through the bank itself and we did not reaffirm and yes it is still in my name. What if we can find a place to rent to own with the option to buy in a couple of years? If we walk away and they foreclose can we get an FHA to buy the house?

I am stuck because the mortgage is less than renting but the basically if we walk away we are just renting it then because we will lose the money we paid in. I thought we could walk away at anytime. =(

Oh I totally understand what you are going through. I was in a similar situation. We owned an upside down home but wanted to move out in the country, buy land and eventually build.

What I was able to do was find a seller financed piece of land, use credit cards to develop the property (put in electric, water, etc), then I bought a cheap used mobile home (on CC's as well) to live in for a few years.

At the time I fully intended to rent my house out until the market recovered and then sell; bankruptcy was never even thought of. It was not until everything was a done deal and the market continued to worsen then my wife lost her job that we had to file. Anyway, that is how we managed to get out of the house. We did get it rented too and collected rent for a full year while we waited for it to foreclose, so it is not all bad.

It sure has not been easy; we were lucky to find a seller financed property that we love. Also we had to be willing to downgrade our standard of living for 5-6 years. We went from a modest 1800 sq ft home with a pool and a spa to a 960 sq ft used mobile in the middle of the desert, ohhh but what peace and serenity we have found.

We have made many sacrifices, but my youngster's will be raised on country living, not urban gang violence and drugs!

Keep up the good fight, where theres a will there is a way, I truly believe that.

[dspii]

Best chance that I have found to get an FHA loan sooner than later is to stay current on your mortgage payments, put your house on the market, work with your lender to approve a short sale and sell it. If you are lucky and short sell it while current on your payments, you qualify for an FHA loan 2 years after BK with no penalty waiting period for the short sale. However if you short sell while behind on your payments, you have to wait 2-3 years from title changing names. If you walk and they foreclose, you have to wait 3 years for an FHA loan from the time title changes names. If you get a Deed in Lieu, you have to wait 3 years from the time the title changes names. In each of these scenario's, except current on your payments-short sale, it is likely that your BK waiting period will expire and you have to wait for the other penalty period to expire before you can qualify.

Filing BK extinquished your responsibility for the payments, but did not remove title of the "secured" property from your name. The problem is, when you apply for another loan, a search of public records, not the one on your credit report, will show the foreclosure, deficient short sale and deed in lieu. It sucks, I know...I am living this reality right now. Maybe rules will change in the future, but right know if you applied for a mortgage, expect a proctology exam......they are being brutal in their approvals.