Case closed

[StuckinaRut]

Received the order approving account, discharging chapter 13 trustee and closing estate today. Also received the trustee's final report. We paid off over $164,000 in 51 months. I'm glad we filed, but am happy we are through. I've been approved for a small unsecured credit card and we are looking to buy a new home next year. Here's to our financial freedom!!

[justbroke]

Congratulations! A Chapter 13 is special and is hard work!

Under which loan program will you attempt to purchase a home? FHA? I am waiting to get a conventional mortgage next year.

[sophieanne]

Congratulations..you worked hard and now it’s time to enjoy your financial freedom ..it feels great,doesn’t it? 😀

[shipo]

Congratulations! Question, where are you thinking you'll find a mortgage only a year out from your Discharge? I ask because I was discharged in March of this year and would love to start shopping for a mortgage, but am under the impression it will be decidedly difficult until March of 2022.

[StuckinaRut]

Already been preapproved for an FHA loan. In fact we were approved prior to discharge.

[sophieanne]

shipo - if you want a conventional mortgage, you’ll have to wait, but you can get FHA right out of a 13, Yes you have to pay a monthly insurance fee..but it’s easier to qualify for and you can actually get a higher mortgage than with a conventional loan. It’s a small insurance amount to pay to get a house right away and in a couple years you can refinance if you want.

[shipo]

shipo - if you want a conventional mortgage, you’ll have to wait, but you can get FHA right out of a 13, Yes you have to pay a monthly insurance fee..but it’s easier to qualify for and you can actually get a higher mortgage than with a conventional loan. It’s a small insurance amount to pay to get a house right away and in a couple years you can refinance if you want.

I've very carefully gone through the U.S. Department of Housing and Urban Development Handbook 4000.1, and it seems pretty clear; you need to wait 2 years after a Chapter 13 to qualify for an FHA mortgage, errr, unless you can somehow trigger manual underwriting.

[sophieanne]

shipo - that’s not true..I know it, since I did it. Yes, you’re correct you need to work with a lender or broker who can do manual underwriting, and one of the things that needs to be done in the application is having you write a letter to explain why you went bankrupt (and how you’ve turned yourself around). Many people have learned you don’t have to wait..including myself. Check for lenders/brokers online .
ps - I learnt about this from a moderator who use to be here 😊

[shipo]

So what you're saying is my comments were essentially true, manual underwriting or no mortgage approval. Is there a process for finding, or a list which identifies lenders/brokers willing to go through the manual underwriting process?

[sophieanne]

I don’t want to commit to 100 percent agreement..but I think it’s close 😊. You can do a web search or contact a mortgage broker who can set you in the right direction, Maybe ask StuckinaRut who their contact was made with.

[justbroke]

The difficulty with manual underwriting is finding someone who will do it. I was loan shopping late last year and one lender backed out. When they ran my credit it came back ACCEPT/APPROVE, but when they saw the bankruptcy they then told me that they don't do manual underwriting and withdrew the conditional approval.

You may have to get a broker or shop an FHA yourself. but am FHA can be done.

[Barbisi]

In our case, waiting at least two years to even consider another home purchase seems to me to be in order.
Buying two different houses with two mortgages is what got us in the mess we're in (the first led directly to BK13 (i.e. 100K + in necessary repairs and updates just to live in some degree of comfort and safety) and the second, an ultra high mortgage with a solar panel lease (currently around $2400 , sure to increase every year and one that is starting to need system replacements (i.e swamp cooler, furnace,etc.) as well as home updates (i.e. window blinds, carpet, plumbing repairs,etc.)
If we foolishly try to stay here and keep paying this for years to come, we will end up in a second bankruptcy.
The cost to live here is simply not sustainable in our situation and the quality of life so negligible (esp. for me) it is not worth while to continue to just try to survive here .
My attitude is : let the next buyers spend the money to update everything- we've been rooked once, now all we want is to come out of this nightmare with a little money so we can rent some where else and decide if we really want to stay there a while!
All we need in 2022 is to get stuck buying another ill-advised home , having to file BK13 again and getting trapped there (like we are here!) for the 5 year duration.
Admittedly,few people end up in BK13 because they bought a money pit that they couldn't afford to fix up with out excessive use of CCs, but that's our sad story!
I hope our tale of a Colorado Calamity serves to warn others that you don't have to always have a mortgage - sometimes renting is the best option!

[Carmella]

Congrats to not stuckinrut any longer

[justbroke]

In our case, waiting at least two years to even consider another home purchase seems to me to be in order.

Barbisi, that is exactly my strategy. I am waiting for 2 years post Chapter 13 discharge so that I can qualify for a conventional mortgage.

[shipo]

Barbisi, that is exactly my strategy. I am waiting for 2 years post Chapter 13 discharge so that I can qualify for a conventional mortgage.

Me three; yeah, getting a mortgage before the two year window has expired may be possible, but with the insane resurgence of my career well into my 60s, I really don't have the time to do the legwork to find someone to manually underwrite a mortgage.