Getting a home loan while in a Ch 13

[rjd78]

I'm 24 months into a Chapter 13. Always on time with my payments, etc. I was wondering if anyone had any experience with finding a home loan while in the middle of a Ch 13. I've looked around and I feel like I'm running in circles. Every website I go to seems to lead me back to LendingTree.com.

Anyway, I've basically cold-called a few local banks and they said that my credit score needs to be higher than it is before they'd even look at me as a consideration. Problem is that the trustee won't allow me to get a secured credit card, and I don't see any other way to get my credit score back up.

It's kind of frustrating and ironic, because I now make a very good living with a poor credit score and can afford a mortgage (never owned before), but, banks will not loan to me. In the past, I had really good credit, but realistically wouldn't have been able to afford a mortgage, while a bank would have loaned me a substantial amount simply due to my credit score being so high.

Anyway, I was just seeing if anyone had any experience with this. Recommendations (just keep renting for 3 more years?), advice, whatever.

Thanks.

[forgotten]

Honestly, you don't have much chance of getting a home loan in your 13.

Banks are mich stricter about lending today, you would need 10-20% for a down payment, which I would think would be hard while in a 13. The trutsee is not going to allow you to raise your dwelling expense because you want a house insetad of renting, so you would need the payment+taxes+insurance to be less than you are paying in rent now (unless you are, and will continue to be in a 100% payback).

Your trustee would have to approve you getting a home loan too. Have you asked about that? If they won't approve a secured card there is good chance they won't approve a new home loan.

Then, as you said, your credit score. Once again, more strict, not lending to people with lower credit scores.

Basically... my advise... keep renting the next 3 years then see what your options are.

[justbroke]

Exactly, I think getting a "new" home in a Chapter 13, while you are renting and your plan is based on renting, is a non-starter. You would be subjected to objections by the Trustee and the Creditors.

[rjd78]

Thanks for the replies. I appreciate them.

I talked to my attorney a little while ago and he said that, with my income being verified as it is, that the trustee would more than likely approve me for a home loan. I've received a fairly significant pay raise and filed an amended Schedule I & J to reflect my change in income and expenses.

I have a pretty lenient trustee. He's not asking for any more money with my raise, is allowing me to keep my tax return, and has reduced my monthly payments to him to allow me to get a different car after mine broke down.

My attorney said that he would more than likely allow me to incur new debt to purchase a home, provided I can get pre-approved. So, the first step is to get approved; which, obviously, is where I'm having the problem. I'd just prefer to own a house right now while prices are low(er) rather than rent and, hopefully when the housing market bounces back, I'll have a house who's appreciation is fairly hefty.

At any rate, I appreciate the responses. I know every person's case is different. I've heard stories about hard-nosed trustees who are nothing like mine.

[justbroke]

Wow, you do have a nice Trustee, and hence my apprehension for rocking the boat when the Trustee is a... pain. As your attorney stated, you would need to Motion to Incur Debt and have that approved by the court and Trustee. You'd also need to Motion to Modify Confirmed Plan once your loan closes, so that your payments and the loan is accurately reflected in the record.

If you're so inclined, go through the motions and see what happens. Worse case, is that a Creditor objects to your new plan. I think you say that the Trustee probably won't object to any of it, so that's a good think. Most creditors are asleep anyhow.

Before buying, though, make sure you have really run through your budget. Make sure you have accounted for principal, interesting, taxes, insurance, repairs, unexpected repairs, homeowner fees, additional taxes and fees, and contingency!