May I buy a home post chap 7, then walk away from non-reaffirmed mortgage

[rhoward20]

I had a chapter 7 BK 4 years ago and did not reafirm my mortgage. i have been living in the home paying my mortgage. I live in California and the house I am in is deeply underwater.

My question is, is it possible, because on my credit report it shows the mortgage was included in BK, I may look and purchase a new home. After purchasing the new home, stop paying and allow the foreclosure on my original home to occur.

On my second mortgage, which I also did not re-affirm, I have a balloon payment that will come due in the future. that is one of the reasons I would like to move on, the second reason is selfish and is because I would like to buy when the market is potentially at an all time low.

Thank you for your advice

[Freddy03]

I think it would be very hard to get a new mortgage when you are current on the one included in BK. Because of the house flip flopping most banks are not financing new loans if you already have a mortgage.

[rhoward20]

Im sorry, on my credit report it shows I have no home loan and they were both discharged through BK. I am also a veteran and have the VA available. Have not used it in my current loan. Thanks

[Freddy03]

Im sorry, on my credit report it shows I have no home loan and they were both discharged through BK. I am also a veteran and have the VA available. Have not used it in my current loan. Thanks

I'm not sure how it works but they (the new mortgage co) will know you have a current mortgage even tho it's was discharged. The house is still in your name until you sell it or it is foreclosed on.

[rpraver]

The answer to your question is yes. Whether or not you'll be able to get a mortgage for the new house is another matter.

[df04527]

Agreed - your ability to obtain a new mortgage is going to be an Olympian challenge unless you go with a private lender.

[tobee43]

i very much agree with the other posters in respect to how difficult it will be to get another mortgage, even 4 years out. the banks still don't seem to be lending readily as of late, and even those with great credit have been denied when once they would close in a week.

good luck in finding a lender and please keep us all posted. i'm certain many would like to know who or what lender is letting prior clients with bk's to get a mortgage in today's market.

[NoMoreCards]

You always have the option of buying a home without a mortgage. Land contract or even picking up a foreclosure at Low cost and paying cash. It isnt easy, but can be done. There are options other than a bank mortgage.

[rhoward20]

Thanks for the answers, it is appreciated. How big of a help is having the VA home loan option after BK. i read they will again guarentee two years after discharge. Thanks

[rmcmorran]

Hello - We have looked into a VA mortagage after declaring BK - and they are stating if you can find a lender after two years from discharge, they will guarantee. We have found a lender, but now need to wait until the two year mark.
You do have to be sure that fit the VA's other credit requirments. A credit score of 620 (I believe that is the right number), a secure job for so many years . . . . . Call your local VA and they will be more than happy to help you with their thoughts.

[tobee43]

You always have the option of buying a home without a mortgage. Land contract or even picking up a foreclosure at Low cost and paying cash. It isnt easy, but can be done. There are options other than a bank mortgage.

exactly, i'm a big believer in land contracts.

also, we purchased our home 100% owner financing after our bk. didn't go near the banks!

[HHM]

You won't be able to do any sort of "sign and bail" strategy for any conventional mortgage lending options.

The banks either want
1. Enough income to support both mortgages (not likely)
2. Signed sale agreement (but if its a short sale, forget about a new mortgage)
3. Or, some sort of long term lease signed for the old house (and still #1), this option has limited success.

Banks will not do sign and bail anymore.

So, as others have suggested, you can only do non-conventional style home purchases. Owner finance, land contracts (note, I am not sold on land contracts, there are issues you need to make sure you are comfortable with).

[mountanddo]

You won't be able to do any sort of "sign and bail" strategy for any conventional mortgage lending options.

The banks either want
1. Enough income to support both mortgages (not likely)
2. Signed sale agreement (but if its a short sale, forget about a new mortgage)
3. Or, some sort of long term lease signed for the old house (and still #1), this option has limited success.

If you have a long term lease signed would you still need to prove you can support both mortgages? What about a contract for deed? When we bought our home we did a contract for deed and that money supported itself so we were able to get financing.

[rhoward20]

How do they know about your mortgage if it is not on your credit report?

[Freddy03]

How do they know about your mortgage if it is not on your credit report?

Public record and your mortgage still shows up on your credit report.