Purchasing a home while in Ch 13 BK

[lllambey]

I filed for Ch 13 BK in July 2007 and it was confirmed a few months later. I have been in repayment for nearly 3 years and have 2 more to go. I relinquished my home through the BK and have been renting for nearly 3 years. I am interested in purchasing a home because I have had enough of renting. Has anyone been successful in getting a home loan while in repayment? If so, which lender did you use. Also, did you have to pay your BK attorney to go to the Trustee to get authorization to get a loan? If so, how much did it cost?

Any information that anyone can provide about getting a home loan while in Ch 13 BK will be much appreciated.

[Flamingo]

The chance of you getting approved for a mortgage to purchase a home while in active Chapter 13 is probably zero. Also, trustee permission is needed for any credit obtained during a Chapter 13 and even your request to purchase a home while in Chapter 13 will raise eyebrows and may make the trustee want to look more thoroughly at your situation since to purchase a home you need a downpayment and money to afford settlement fees, closing fees, etc. I suggest you sit down with your attorney and review your situation, try to successfully completed your plan, get your discharge and prove you are creditworthy again by taking a few years to pay all bills on time, be prudent with credit, etc.

[momofthree]

The programs that were around back when you purchased your first home are no longer available (100% financing, ability to finance closing costs, etc.), so like Flamingo said, you'd need a large chunk of cash in order to purchase a home, which is nearly impossible while in a ch.13. If you do have a large chunk of cash, would using it for a down payment eat up all your savings? You don't want to be without an emergency fund during your plan, that's a recipe for disaster.

Let's say you've been very conscientious and saved a lot of money. You have enough for a down payment and still have an emergency fund left over, and you can show that buying a home would cost the same (or less) as your current rental situation, then you may have a shot at convincing the trustee to allow the debt. I'm not sure if you'd be able to find a bank willing to provide the financing though. They've gotten very picky in recent years due to the mortgage crisis. IF all these points apply to you though, it's worth a shot....

[becky20]

I'd be curious to know how a trustee would react if someone applied for approval to get a mortgage when they only had 6 months or so left of their plan... I talked to my attorney and he said that he doesn't think that getting the trustee to approve would be a HUGE hurdle, but thought getting the financing approval would be the issue. I'm hoping that by the time I'm close to discharge, that I could get approval right at the end so I don't have to wait 2 years post discharge. UGH.

good luck! If you're able to get approved, please keep us updated!

[987654]

I have read (in other places) that, in certain States, HUD loans are available after you've had 2+ years of payment history under a Ch 13 plan. I don't know how accurate that is, or if it's current info, but worth looking into.

Outside that, I know several people with great-excellent credit who have approached banks about getting a mortgage in recent months. In all cases, the bank has said they need 30%+ down. Banks just aren't lending now, and when they do they are very specific about criteria. I think it would be difficult to find one in the current economy who would be willing to lend to someone in Ch 13 at all, let alone without an even more substantial down payment than the 30+%...

[$$only4ever]

Unless you are eligible for VA Financing, I would have to agree with the OPs. If you are eligible for VA financing, you may be approved based if you have made 12 on time payments to the trustee, but I am sure that you will have to jump through many hoops to make it happen. Just my advice, but you may want to wait until you are discharged. That is what I did and the loan went through without any problems at all.

[Carter]

How do you go about asking the trustee for approval. Is there an official form to submit?

[TexasEx]

I think that depends. My trustee has a form on their website that you can download fill out and have your attorney submit.

[becky20]

Unless you are eligible for VA Financing, I would have to agree with the OPs. If you are eligible for VA financing, you may be approved based if you have made 12 on time payments to the trustee, but I am sure that you will have to jump through many hoops to make it happen. Just my advice, but you may want to wait until you are discharged. That is what I did and the loan went through without any problems at all.

That's encouraging - I thought it would have to be 2 years post discharge... Can you give more info? What was your credit score? Did you give up your home in the bankruptcy? Interest rate? Downpayment? FHA/Conventional/VA?

Congrats on your home purchase!

[Flamingo]

How do you go about asking the trustee for approval. Is there an official form to submit?

If you are represented by an attorney, your attorney will have to get approval from the Trustee. The trustee will not work with anyone directly if they are represented by counsel. There will probably be more attorney's fees involved as this is usually not part of a regular bankruptcy and there may be costs for filiing a Motion.