Job Transfer/Buying a House

[jamesalip]

Has anyone had experience with buying a house while in chapter 13? My wife's job is transferring us back to Florida and we would like to buy a house. I know we need permission from the courts, but does anyone have a list of lenders that work with people in bankruptcy. Almost everything I research online says, "Buying a house after bankruptcy." Any help would be greatly appreciated. Thanks in advance.

[lrprn]

The reason you don't see anything online or here in the forums about buying a house during an active Ch 13 plan is that it's impossible to do. No lender is going to lend you the money to buy a home, and since all your disposable income is going into your Ch 13 payments, you'll have almost no downpayment anyway. The days of 0-5% down mortgages are long gone.

Let's say a family member or friend wanted to buy a house in Florida then allow you to live in it and pay rent until your Ch 13 is over and two years out from discharge when you can qualify for a mortgage yourself again. That's a possibility.....but I'm betting this is not the situation you have in mind.

[jamesalip]

I appreciate it. I have to be honest, my trustee payments are only $100.00 a month since we modified the house payment and removed the arreages out of the BK. Also, our car is caught up and no longer being paid through the bankruptcy. I tell you this to say that we have recieved promotions and raises since our bankruptcy started 2 yrs ago. Our total debt to income now is only about 24.06%, which includes the house, car and every thing we pay. Our trustee has never asked for our tax returns or new financials, which has made it possible for use to save quite a bit of money. I think our situation may be different, but maybe I'm wrong. I read FHA guidelines for purchasing a house and they will approve when in BK as long as it is a year out from the plan start date and we have made our house payment on time. I will research a little more.

[newbie2]

I appreciate it. I have to be honest, my trustee payments are only $100.00 a month since we modified the house payment and removed the arreages out of the BK. Also, our car is caught up and no longer being paid through the bankruptcy. I tell you this to say that we have recieved promotions and raises since our bankruptcy started 2 yrs ago. Our total debt to income now is only about 24.06%, which includes the house, car and every thing we pay. Our trustee has never asked for our tax returns or new financials, which has made it possible for use to save quite a bit of money. I think our situation may be different, but maybe I'm wrong. I read FHA guidelines for purchasing a house and they will approve when in BK as long as it is a year out from the plan start date and we have made our house payment on time. I will research a little more.

Edited to add: When I looked over your earlier posts it appears that you are paying -0- to unsecureds. That could cause the trustee to question even more closely your request to incur new debt. One of the sayings around here is "flying under the radar of the trustee" during a Chapter 13. In my opinion this would be one of those cases in which you should take a step back and fly under that radar.

When you ask the trustee for permission to incur this new debt he/she will ask your attorney for current financial information to make sure that you can afford the new debt. At that point in the process I would suspect the trustee would then see that you haven't been paying "all disposable income" in to your plan.

[Flamingo]

I agree with the above...when you go through all this as to your move and working with your attorney and trustee as to all that, there is going to be inquiry as to your funds and what is going on. That's the way it is with Chapter 13...your finances during your Plan years are not yours and not under your control...you need permission and your financial situation will be entirely reviewed.

[jamesalip]

Thanks for the info. Either way, we are moving to Florida due to my wife's job, but maybe we will just rent and sell our current house. Our plan is in the middle of being modified right now because all secureds are paid. They are going to modify it to pay unsecureds. I am actually ok if we move to a 100% plan, of course I am not going to ask for it, but I'm ok with it. :-) I will wait and see what happens on Friday April 30th. Again, thanks Newbie2 and Flamingo.

[BuckeyeGuy13]

A few things on this. First, the market in Florida has been crushed over the past few years. I'm not sure where you're going specifically, but there are a lot of deals to be had in several of the markets. Secondly, as your plan is already accounting for a mortgage payment, that aspect of your budget will not go away - you're going to need a place to live - so, as the others have said, you'll need to work through your attorney to get a modified plan in place so that you know what you can expect to pay for rent and/or another mortgage. They may tell you to get some numbers first, I don't know...

Thirdly, I wouldn't necessarily count out a mortgage altogether. Again, as the others said, they can be difficult, but you might be able to get something. It could be FHA, it could be USDA, who knows. But, you'll have to do the research and find out. I don't know if you have a foreclosure or not, which will impact your ability. If you don't, an FHA loan may work, but you'll have to find a lender that will write it. My recommendation is to get with a mortgage broker, explain the situation, and have THEM do the legwork for you.

Finally, you may find out that renting is a better option for you. It's a renter's market in many areas these days and you wouldn't have the hassle or expense of ownership. You could ride out the balance of your plan and then look to purchase.

If you haven't been down there in years, why not rent, check out some areas, wait for your discharge, and then buy if it's still a need at that time?

Bottom line, it's not going to be easy and I doubt you'll get anything conventional, in terms of lending. But, with some research and utilizing a broker, they may be able to find something. Do that AFTER you get with your attorney...

Best of luck to you!

[Flamingo]

A few things on this. First, the market in Florida has been crushed over the past few years. I'm not sure where you're going specifically, but there are a lot of deals to be had in several of the markets. Secondly, as your plan is already accounting for a mortgage payment, that aspect of your budget will not go away - you're going to need a place to live - so, as the others have said, you'll need to work through your attorney to get a modified plan in place so that you know what you can expect to pay for rent and/or another mortgage. They may tell you to get some numbers first, I don't know...

Thirdly, I wouldn't necessarily count out a mortgage altogether. Again, as the others said, they can be difficult, but you might be able to get something. It could be FHA, it could be USDA, who knows. But, you'll have to do the research and find out. I don't know if you have a foreclosure or not, which will impact your ability. If you don't, an FHA loan may work, but you'll have to find a lender that will write it. My recommendation is to get with a mortgage broker, explain the situation, and have THEM do the legwork for you.

Finally, you may find out that renting is a better option for you. It's a renter's market in many areas these days and you wouldn't have the hassle or expense of ownership. You could ride out the balance of your plan and then look to purchase.

If you haven't been down there in years, why not rent, check out some areas, wait for your discharge, and then buy if it's still a need at that time?

Bottom line, it's not going to be easy and I doubt you'll get anything conventional, in terms of lending. But, with some research and utilizing a broker, they may be able to find something. Do that AFTER you get with your attorney...

Best of luck to you!

I agree with what lrprn stated above; you have a better chance of hitting Powerball than getting a mortgage during an active Chapter 13. You can refinance as we all know and even then to get refinancing you have to make sure all your Plan payments have been made and made on time and and be able to meet all requirements. Also, since you are moving to another state you have a lot of things to go over with your attorney. They are going to be interested in your wife's new income so be prepared for all sorts of financial questions. Just for us to refinance during our Chapter 13 took us almost six months from start to finish to get all the paperwork in place, Motion filed, Trustee approval, just to name a few items. Again, while it is hard to comprehend and deal with, your money is not your own during a Chapter 13 from the day you file until the day you are discharged. It's nice to wish and want but you have filed bankruptcy and are not free to do what someone else can that has not filed.

[jamesalip]

Thanks again for the info. FHA guidelines state that you have to be 12 months out from the start of the bankruptcy and all payments on time. Not a problem on either of those fronts. Also, you have to have made your house payment on time for a year as well. Being as I just modified my loan in August 09, it will be a year in August 2010. We should be good on that. I will look at mortgage brokers in Florida and start calling everyone. We have already come to the conclusion that renting will probably be what we have to do, but I want to try to buy first.

Florida homes are going for a song right now and a ton of shortsales are listed. Our families live there and that is one of the draws for us to return, besides my wife's job. Again, all very good info and I will take it all into consideration. I would prefer to fly under the radar as I have already done, but that may be difficult now that we have decided to go to Florida.

[becky20]

So if you're in a chapter 13 you can qualify for an FHA loan if you meet certain conditions, but the second you are discharged, you then have to wait another year or two to qualify for a 13?! That sucks! We're actually in one of those situations, where my parents have bought a house and we're renting it from them with the intent to, at some point, purchase the house from them. Maybe the best bet is to try to qualify in your last year of a 13, so you can get trustee permission to buy before you're discharged and have to wait another 2 years?

[BuckeyeGuy13]

Again, I stand by my recommendation to get with a mortgage broker that specializes in this rather than take blanket advice from this forum. Also, again, while it will be difficult and may not result in what you want, it may be possible. Nobody on this forum is going to know better than an expert in the field that deals with these situations.

Calling an expert will not cost you anything but your time. THEY will know what options are available or not. THEY deal with these situations all the time and will know who is lending and under what conditions.

[krielly]

So if you're in a chapter 13 you can qualify for an FHA loan if you meet certain conditions, but the second you are discharged, you then have to wait another year or two to qualify for a 13?! That sucks! We're actually in one of those situations, where my parents have bought a house and we're renting it from them with the intent to, at some point, purchase the house from them. Maybe the best bet is to try to qualify in your last year of a 13, so you can get trustee permission to buy before you're discharged and have to wait another 2 years?

There is no change after 13 discharge (for FHA). You would still potentially qualify, depending on meeting all other eligibility requirements....