What to do?!? When?!? Help, advise, thoughts please!!

[Licoriceky2]

We are at a crossroad and need some advice. We are on track for a successful completion in June of 2015 after five years .

We are discussing several options right now, however I have yet to find anyone local, including my attorney, who can provide any insight or knowledge regarding my questions….

1. Is financing (refi or sell/buy) even possibly immediately after discharge?

2. Do you need to apply for a FHA loan or refi *prior* to discharge?

3. How realistic it is to think we could sell our house and buy another or refi?

Our goal is to either reduce our monthly mortgage or purchase a lessor home (right now 8 years into a 30yr @5%, with PMI for $1819 with escrow). Our house appraised for $265k in ’08 (last refi) and we will owe approx. $228k in June. For informational purposes, we are in the Eastern District of Kentucky (Lexington, KY area).

I would GREATLY appreciate some thoughts, advise, directions, opinions etc!!
Thank you!
Jamie

[LadyInTheRed]

There is no reason you can't sell your house as soon as your bankruptcy case is closed. Whether you will be able to refi or get a loan to purchase a new home is not so clear.

At least one bkforum member has reported either refinancing or getting a new loan during there Chap 13 and FHA guidelines do allow it. Some have said you have to wait until 2 years after discharge. I can't quite accept that you can get a loan during Chap 13, but have to wait 2 years if you wait until after your discharge, but I suppose it is possible. I don't remember seeing any definitive answer or hearing any stories about people refinancing or purchasing within 2 years of discharge of Chap 13. I will be interested to see if any new information comes up now.

My last payment is in April. If I had equity in my home, I would already be talking to mortgage brokers with experience working with borrowers during and after Chap 13 to find out whether I can and should refi before I finish my plan.

[BNKRPTinNC]

There is no reason you can't sell your house as soon as your bankruptcy case is closed. Whether you will be able to refi or get a loan to purchase a new home is not so clear.

At least one bkforum member has reported either refinancing or getting a new loan during there Chap 13 and FHA guidelines do allow it. Some have said you have to wait until 2 years after discharge. I can't quite accept that you can get a loan during Chap 13, but have to wait 2 years if you wait until after your discharge, but I suppose it is possible. I don't remember seeing any definitive answer or hearing any stories about people refinancing or purchasing within 2 years of discharge of Chap 13. I will be interested to see if any new information comes up now.

My last payment is in April. If I had equity in my home, I would already be talking to mortgage brokers with experience working with borrowers during and after Chap 13 to find out whether I can and should refi before I finish my plan.

Here is what I have found out since I have been actively trying to refi my mortgage. HARP is your best bet unless you have a conventional mortgage, like me. My understanding is that under HARP you can to do the refi while still in an active 13. In my case, I have been informed by several different lending institutions that a 1-2 year wait (2 yrs. from all but one), after discharge, is the norm. For me to refi would require mortgage insurance as my house has little to no equity (depending on which site you use to find approximate real estate values) and in fact may be under water. It's a bit frustrating as we are in the best financial shape we have ever been but such is the way after bk. My current credit score is 685. I have one mortgage company that is supposed to call me next month (which will be a year post bk) and I will post again if they come thru. However, I'm not holding my breath. I am thinking of approaching my current lender and see if they want to do a shorter term lower interest rate on the balance. It will probably cost some fees and I'm not sure I really want to keep giving them my money as they were pretty rude when we filed in 2008. Go figure. But who knows, all they can say is no.

[Licoriceky2]

Just as an update. I was able to consult with a loan officer and spend several hours going over things with her. In the end, my credit score (595) and my husbands (619) were too low. She said the minimum we could have to refi or buy with FHA (who she communicated would be our ONLY option given we were in a 13) was a 640. She said she did not see any significant issues with our credit other than the 13 and additionally, she said she was surprised to see our mortgage co (Ocwen) reporting?!? She told me that we could re run the credit report in June when we obtain discharge but she does not believe it will have come up enough to qualify. Told me probably we would be 18months out from being able to refi as they want to see established credit which would take 12 months to report (from june 2015 discharge). She went on to tell me if she could refi us now we could save $435/month

I guess I am not overly surprised but just very deflated. I have heard from people talk about HARP loans but I know nothing about them

[LadyInTheRed]

You can learn about HARP and other Federal programs at http://www.makinghomeaffordable.gov/...ages/harp.aspx