Planning ahead. FC/CH7/MOD->?

[angelasdad]

Hey there...

I had a foreclosure filed on my home 2/2011. I filed chapter 7, 4/2011, case was closed in 8/2011. I did not reaffirm. I have since worked out a modification with my mortgage and the foreclosure case was dismissed. I have every intention on staying in my home and current on the mortgage.

BUT,

Provided I could sell or rent my current home, what does that give me for a time frame to get a new mortgage? Does it revert back to the 2/3 years from BK? Or does it work off of my now dismissed foreclosure date? I can't imagine that I have to surrender my home and some point and let it foreclose to let the clock start ticking....

Any thoughts?

Jim

[tobee43]

you didn't have a foreclosure, so that would not be applicable. they say it's 3 years from a foreclosure date and or bk. since you never really did foreclosure, that would not be the issue.

if you did rent out the place you would have to prove to the bank that it has income and is more an asset than liability. you will most likely be required to provide back tax 1040's indicating the depreciation, income, loss, profits, costs etc. otherwise the lenders look at this type of situation and say you can't afford two mortgages.

the other factor to consider if you decide to rent your present property, is many times there are clauses in your existing mortgage which clearly state that this property must be your primary residence and not to be used as a rental. (this subject matter has been coming up more and more lately on the site as more people are thinking about leaving and renting their old homes to either move or buy new). what may or use to happen is that clause gives the banks a right to accelerate your loan, or call it in, in other words they can demand full payment of the balance of the existing mortgage. why? because commercial lending rates many time are much higher than regular consumer loans...the banks want their cut. once you use your property to generate income it becomes a business situation, thereby becoming a commercial piece of property as opposed to someone's primary residence.

i'm not saying this will happen, especially in light of todays markets most lenders are happy to just have people paying their mortgages on time no matter who is it paying it. i'm just saying it could be one of the pitfalls, as well as liability issues when renting.

of course if you sell the house you will not have any of that to worry about. i have heard some cases that people are getting mortgages 2-3 years after bk's but they are far and few between. as, we know even those with perfect credit are having problems! bottom line is the banks just are not lending much now a days.

best of luck to you! i'm sure it will all work out.

[SMinGA2]

As Tobee said, no FC for you. Which could be a good thing.

For getting a new mortgage in addition to the existing - expect to need enough income to qualify for the new with the old one counting as a debt. You won't be able to count the rental income in your DTI unless you've got a 2+ year history for most loan programs. Have a friend who went thru this earlier this year. Ch. 7 discharged in 2005, kept the home. (Don't know if they reaffirmed or not.) Income has gone up in the past ~7 years and they got a great deal on a bigger house on a huge plot of land. (In addition to income, their family size also increased over the years.)

[tobee43]

As Tobee said, no FC for you. Which could be a good thing.

For getting a new mortgage in addition to the existing - expect to need enough income to qualify for the new with the old one counting as a debt. You won't be able to count the rental income in your DTI unless you've got a 2+ year history for most loan programs. Have a friend who went thru this earlier this year. Ch. 7 discharged in 2005, kept the home. (Don't know if they reaffirmed or not.) Income has gone up in the past ~7 years and they got a great deal on a bigger house on a huge plot of land. (In addition to income, their family size also increased over the years.)

yes, income, income and more income! as long as you have that, you are good to go. that's nice to hear someone doing so well as their 7! life can get better

[SMinGA2]

For my friend - its a story of hard work. Got his masters - and a better job. (His employer paid part of his tuition expense as well.) The house they just bought is on 5 acres w/ a pool. Nearest neighbor is a fire station and you can't even see that from the house. The last owner bought 2.5 years ago for $250k and then put $ into a full interior renovation. Then lost it to FC. I don't know the story, but I wonder if they thought it was a deal at that price and they could flip it? (It was empty for at least 2 years.) As I understand it, my friend paid about 1/2 the last purchase price. Took a lot of work to get it move-in ready, and they still have a list of projects to do. But its the perfect house for them now.

[angelasdad]

I understand the in and outs of renting and getting another mortgage. Not sure even if that would be the route. Seeing as my house is a little underwater I had the thought of renting it. That's all for discussion down the road. I was more just concerned of when my clock is ticking for a new mortgage. Looks like it started clicking when I was discharged. The foreclosure case I guess would just be a red flag that I'd have to do some explaining about. Like I said earlier, I'm staying put and staying current! CH7 was the best thing I could have done, should have done it years ago. My foreclosure never would have been filed then. Eh, you live and learn.

Thanks for the help.

[tobee43]

SMinGA2;579216]For my friend - its a story of hard work. Got his masters - and a better job. (His employer paid part of his tuition expense as well.) The house they just bought is on 5 acres w/ a pool. Nearest neighbor is a fire station and you can't even see that from the house. The last owner bought 2.5 years ago for $250k and then put $ into a full interior renovation. Then lost it to FC. I don't know

that must have been a long hard road! and what is the BEST is that the employer paid part of his tuition, how nice and very rare now a days. so glad to hear someone is making it through these hard times.

[tobee43]

I understand the in and outs of renting and getting another mortgage. Not sure even if that would be the route. Seeing as my house is a little underwater I had the thought of renting it. That's all for discussion down the road. I was more just concerned of when my clock is ticking for a new mortgage. Looks like it started clicking when I was discharged. The foreclosure case I guess would just be a red flag that I'd have to do some explaining about. Like I said earlier, I'm staying put and staying current! CH7 was the best thing I could have done, should have done it years ago. My foreclosure never would have been filed then. Eh, you live and learn.

Thanks for the help.

it's 3 years from your foreclosure not your discharge unless you prevent the foreclosure somehow and keep the payments up by renting.

many have also said it's 3 years from the discharge date as well, with no foreclosure, but i don't really know about either, we went owner financing @ 100%. our house will be paid off within the nest 20 months and we have owned it about a year and a half. the goal was to get it paid off in 36 months, but i'll be a few months off.