Buying house 1 year after chapter 7

[drowningNdebt]

So the time has come for me to buy a new place to live. I have no debt, rebuilt my fico pretty well, it's a 756 now and own my 2 cars out right and have savings. I'm looking at a place that's $45,000. How long do I have to wait to buy? Is it to early being 1 year after discharge? Also, if I get a mortgage and put $5000 down I calculated my payment at only $260 a month. Would a bank even entertain such a low loan amount?

[DebtEnder]

Assuming no foreclosure after BK was involved for FHA it is 2 years from date of discharge to get financing.

[backtoschool]

I agree with DebtEnder. You cannot get an FHA or standard mortgage earlier than 2 years after discharge if you do not have a foreclosure, and three years after discharge if you do have a foreclosure.

[tcreegan]

Hi drowning, Hi back2school...long time no post!

Try a local bank who makes their own decisions on mortgage lending, get a face-to-face meeting to go over your personal situation and see what they say.

Congrats on your BK success!

Tom in Colo

[angles]

Good advice Tom. A local credit union is more likely to talk to you and consider your situation in a face-to-face meeting. The big banks only look at your paperwork and it is easy for them to say no. You have nothing to loose by talking to your local credit union.

[tobee43]

yes, i most certainly agree with the local credit union....however money seems to be tight everywhere...we just had a friend with a fico over 800....big downpayment....and couldn't get a dime out of 5 banks...

however, the amount your asking for is reasonable...so i hope the very best for you!! we did call fha and they told us at least 2 years if not longer so at this point we are in a situation where the owner has agreed to hold the mortgage for us if we can't get a mortgage.

best of luck with it!

[psx402]

okay, If i don't reafrim and walk away in two years could i take a foreclosure hit on my credit? I'm looking to buy a home in 2 years or 3 to get out from under my under water home. Any adive would be great.

[DebtEnder]

After BK assuming you did not reaffirm then nothing else can cause any change to your credit report. However there is a separate recording systems, CAIVRS , that will record the non sell or full payoff of the lien and THAT will block you from FHA/conventional financing for the next 3/4 years respectively.

[tcreegan]

Hi all,

Some good news for us BK folks: if it was discharged in a BK, it is not supposed to show up on CAIVRS and FHA has reduced the time frame to two years past discharge date. Now FHA still wants a reason for the BK and some good credit rebuilding post-BK so it is still not a slam-dunk....

If the mortgage is discharged (no reaffirmation) and the lender forecloses, it is against the property, not you personally...shouldn't be a stretch to get it off your credit report.

tobee mentioned a good point, look for locals doing 'owner financed' We did that, it has been going great so far!

Tom in Colo

[DebtEnder]

O that is good news

[tobee43]

Hi all,

Some good news for us BK folks: if it was discharged in a BK, it is not supposed to show up on CAIVRS and FHA has reduced the time frame to two years past discharge date. Now FHA still wants a reason for the BK and some good credit rebuilding post-BK so it is still not a slam-dunk....

If the mortgage is discharged (no reaffirmation) and the lender forecloses, it is against the property, not you personally...shouldn't be a stretch to get it off your credit report.

tobee mentioned a good point, look for locals doing 'owner financed' We did that, it has been going great so far!

Tom in Colo

yes tom, that is my understanding as well...especially IF the foreclosure takes place AFTER the discharge....

if one has already listed and no reaffirm and the mortgage was discharged along with the rest of the debt it would make sense...the bank can't go BACK...(or i guess they can try anything)...and THEN foreclose i.e. 9 months later after the debt was already discharged and now list it as a foreclosure...

really...though, if you think about it, a foreclosure stays on your credit report for 7 years while a bk stays on for 10....i wonder just how much weight one has over the other with respect to obtaining a new mortgage??

[SunshineGal]

However there is a separate recording systems, CAIVRS , that will record the non sell or full payoff of the lien and THAT will block you from FHA/conventional financing for the next 3/4 years respectively.

CAIVRS is government system, it shouldn't effect conventional financing, however, the bk and foreclosure will.

Some good news for us BK folks: if it was discharged in a BK, it is not supposed to show up on CAIVRS and FHA has reduced the time frame to two years past discharge date. Now FHA still wants a reason for the BK and some good credit rebuilding post-BK so it is still not a slam-dunk....
Tom in Colo

This is my understanding as well. But, beware, when FHA says 2 years with extenuating circumstances, what they mean is really extenuating circumstances. "I lost my job and went through a divorce" isn't going to cut it. "I lost everything I owned in Hurricane Katrina" probably will. The automated underwriting system will automatically issue a "refer" which means the loan will need to be manually underwritten. In addition, each lender can add their own guidelines, so where FHA may allow it, Bank of XYZ may not.

yes tom, that is my understanding as well...especially IF the foreclosure takes place AFTER the discharge....

if one has already listed and no reaffirm and the mortgage was discharged along with the rest of the debt it would make sense...the bank can't go BACK...(or i guess they can try anything)...and THEN foreclose i.e. 9 months later after the debt was already discharged and now list it as a foreclosure...

really...though, if you think about it, a foreclosure stays on your credit report for 7 years while a bk stays on for 10....i wonder just how much weight one has over the other with respect to obtaining a new mortgage??

In the world of wholesale lending a foreclosure is far worse than a bk. If the house was included in BK, expect them to treat it the same way as a foreclosure. The most important thing after discharge is to keep your credit clean! I have seen loans fall apart on an FHA loan because someone had a 30 day late on a Cap 1 card with a $30 minimum payment due. Really. On a semi related note, watch Cap 1 and Sears, they are notorious for reporting late payments that were never late. In the event someone doesn't reaffirm the mortgage, I would also keep proof of payments (cancelled checks or bank statements) showing you paid on time. Some banks get real nasty and refuse to issue a verification of mortgage if you didn't reaffirm. Meanwhile, a lender won't approve the loan unless they can show you were 0 x 30 days late on the mortgage.

[BROKEDED]

I'm glad Tom replied with that info because that's what I was banking on. The start of this post scared me. I think I asked a similar question about a year ago and it was my understanding that as long as the BK includes the house before it is foreclosed on then you're good. If it gets foreclosed on before you file BK then you have to wait another year to get financed through FHA. Two years for a BK if you basically maintain perfect credit during the 24 months prior to applying through FHA or 36 months with perfect credit after a foreclosure.

Basic FHA loan requirements I found doing a search.

1. Two Years of steady employment, preferably with same employer.

2. Last two years Income should be the same or increasing.

3. Credit report should typically have less than two thirty day lates in last two years with a minimum credit score of 620 or higher or in some cases no credit score at all.

4. Bankruptcy's must be at least two years old, with perfect credit since discharge.

5. Foreclosure's must be at least three years old, with perfect credit since.

6. Your new mortgage payment should be approximately 30% of your gross (before taxes) income.

[Fallonedward]

What if you want to walk away from your house but your bank takes 2 or 3 years to foreclose? We have had the 341 and if we can not find employment by March of 2011 we will move to Georgia. So if we give the keys to the bank and stop paying after March of 2011 and the bank wait till 2014 till foreclose, does my clock start in 2011 or 2014? thanks

[drowningNdebt]

thanks for all the replies! luckily i sold my prior home and paid the mortgage off in full prior to my bk. i never was late on my mortgage payment. so perhaps that will be an advantage for me. my dad said he would finance the property for me at 2% but i would rather not get involved with family and money. however, that would make my payment $160.88 at 2% for 15 years.