Buying a house after Bankruptcy

[whatcredit]

First time post - so please be easy on me!

Our house went to foreclosure June of last year. We had some nice investors buy our house and let us rent from them until we could get back on our feet. We are going to be filing bk chap 7 in the next week which means it won't be finalized until June something. The problem is, they want to move out of state ASAP. Our "lease" is up in June and if things had gone as they were supposed to, it could've been extended after that. Since they don't want to be encumbered by this house after their move, they would like to be out of the loan. (Which I completely understand!)

Any thoughts on seller financed options? That way, we can stay here until we are ready to buy a new house and make the improvements needed to sell the house in pristine condition. My concern is making them feel like their investment is secure and not being stuck with our house as a liability.

Thanks to everyone here for being so helpful in the past. I've just now decided to "delurk".

[Pumpkin729]

An 80/20 can be done to avoid the private mortgage insurance.

Find a broker to talk to-it can give you an idea of specific goals to work on. I can recommend one that I'm working with. He has been great with questions, etc. even though we really won't be a customer until summer. He is licensed in all states but ND, SD, MT, VA, NY, LA, TX, NV, & RI.

can you share who are u working with?

[Samantha]

if you want to purchase a home it is best to try to do so before you file the chapter 7. I am a mortgage broker and i help people who are in foreclosure and bankrupcy if you have a bankrupcy or foreclosure on your credit it is harder to get approve for a home loan, you would have to wait for at least 1-3 yrs before you can purchase a home. Now if you are in foreclosure and bankrupcy and you currently own a home you sholud try to refinance to save your credit or sell the last option should be the lease to buy back which i also do for clients who do not want to deal with a mortgage.

[macahs]

Hi All,

I'm new to these boards and have tried finding answers to this but saw this thread and after reading through, thought maybe you all could answer my question.

I am about to run a FICO (the site recommended from a user earlier on in this thread) for my husband and me.

My two questions are:

1) Is there a company out there that will allow us to monitor our credit report/score unlimited for a certain amount of time? Our bankruptcy was just discharged so we're in the beginning stages of rebuilding.

2) We own our house, owe approx. $178k and the house appraised for $219K last year. We really would like to get some home improvements done on the home, since my husband is a general contractor (which saves us thousands) because we plan on selling and would like to make more of a profit. The house would be worth a lot more with a few things we would like to do - so this isn't a matter of us going out and being crazy with money.

So, my second question being - is an equity line of credit or refi easier to come by than buying a new home? I am trying to look into equity lines but I do believe our scores right now are around 500 or so.

Thanks in advance!

[JeepMom]

if you want to purchase a home it is best to try to do so before you file the chapter 7. I am a mortgage broker and i help people who are in foreclosure and bankrupcy if you have a bankrupcy or foreclosure on your credit it is harder to get approve for a home loan, you would have to wait for at least 1-3 yrs before you can purchase a home. Now if you are in foreclosure and bankrupcy and you currently own a home you sholud try to refinance to save your credit or sell the last option should be the lease to buy back which i also do for clients who do not want to deal with a mortgage.

I waited 5 months.

[himey64]

there was a time when you needed 20% down after bk or for bad credit in general. Not true anymore. Being out of bk for 24 months or more makes you eligible for decent rates and zero down possibilities. I have been getting "subprime" people in homes with zero down for over 15 years. It's the banks that cant do it. Brokers have more power and knowhow to get the job done. check eloanservices.net

[Roy]

This is such a popular question - I have found an article that may help you with the house thing after bankruptcy. You'll fond something there that will help I'm pretty sure! Cut and paste this into your browser -

http://overcoming-bankruptcy.com/2006/06/05/how-to-buy-a-house-in-less-than-2-years-of-bankruptcy/

[Roy]

This may help

Here's something which is related to buying a house after bankruptcy - hope it helps (just cut and paste it into your browser) -

http://overcoming-bankruptcy.com/2006/06/05/how-to-buy-a-house-in-less-than-2-years-of-bankruptcy/

[Roy]

Sorry - the first post didn't look like it was going to work, but there it is - LOL!

[monlyba]

i have no experience with these organizations but have been told by friends that they are great for working with people with credit issues. i've read through most of the info on their websites and it sounds good, but who knows! just thought i'd pass it on for those looking to buy a home.

http://naca.com/index_flash.pbl

http://www.easystreetrealty.com/

[mixxalot]

I would wait at least 2 years after a BK discharge to shop for a mortgage loan. I have some friends and family in real estate and mortgage business who tell me that 2-3 years is the magic time period in which to wait while you re-establish credit after a BK discharge. At least to get best rates and not gouged on a new home loan.

[lrprn]

Mixxalot, this thread has been inactive for eight months. It's against our forum rules to post to a thread this old - there can be misleading or inaccurate information in it, especially since this one stretches back several years. Also most of the posters here are no longer active and will never see what you suggested. In this situation, it's much better to start an entirely new thread of your own - thanks!

[Mortgage Guru]

Our Ch. 7 was cleared in Nov. 2003. We are currently saving for a down payment for a home. We have read that we will need 20% down and that our ch. 7 will have to be cleared for 2 years. Is this true? We currently have not opened any credit cards, and our cars are paid for. We are making monthly payments on our student loans.
What steps do we need to do to ensure that we can get approved for a house loan?

not needed, you should apply for a FHA loan using alternative credit (no credit score needed but we approve them down to 540 scores ( at market rates)one year out of bankruptcy and if its circumstances like death of a primary wage earner it can be done less than a year. You can be approved. use rent, dentist etc. I like to collect five letters. Its important to say the accounts age and it has been paid as agreed and ontime. let me know if you have certain questions.
jeff

[MTG_BANKER_OH]

not needed, you should apply for a FHA loan using alternative credit (no credit score needed but we approve them down to 540 scores ( at market rates)one year out of bankruptcy and if its circumstances like death of a primary wage earner it can be done less than a year. You can be approved. use rent, dentist etc. I like to collect five letters. Its important to say the accounts age and it has been paid as agreed and ontime. let me know if you have certain questions.
jeff

I am not sure how you can get someone approved less then one year out of BK, here are the guidelines straight from FHA. And the only circumstances that allow for less then two years is a circumstances out of a borrowers control, for example death of a spouse, etc...

E. Bankruptcy. A Chapter 7 bankruptcy (liquidation) does not disqualify a borrower from obtaining an FHA-insured mortgage if at least two years have elapsed since the date of the discharge of the bankruptcy. Additionally, the borrower must have reestablished good credit or chosen not to incur new credit obligations. The borrower also must have demonstrated a documented ability to responsibly manage his or her financial affairs. An elapsed period of less than two years, but not less than 12 months, may be acceptable if the borrower can show that the bankruptcy was caused by extenuating circumstances beyond his or her control and has since exhibited a documented ability to manage his or her financial affairs in a responsible manner. Additionally, the lender must document that the borrower's current situation indicates that the events that led to the bankruptcy are not likely to recur.

A Chapter 13 bankruptcy does not disqualify a borrower from obtaining an FHA-insured mortgage provided the lender documents that one year of the payout period under the bankruptcy has elapsed and the borrower's payment performance has been satisfactory (i.e., all required payments made on time). In addition, the borrower must receive permission from the court to enter into the mortgage transaction.

[wvf3]

Additionally, the borrower must have reestablished good credit or chosen not to incur new credit obligations.

Hi Nick,

Thanks for all the good advice. I am beginning my second year out of bankruptcy with the hope that I can buy a home in 2009 or 2010. I am a little unsure on how to interpret the sentence I have quoted above. Are they saying that you should avoid borrowing or are they saying if you have borrowed money since the bankruptcy that you have paid on time. I guess what I am trying to understand is how should one manage credit AFTER the bankruptcy if the goal is to eventually buy a home. So far I have gotten a credit card which I am paying on time and I still have my student loans which have never been late (they have been mostly in deferment). What advice would you offer?

Bill