Offered mortgage 6 months post discharge but skeptical

[username1223]

Just for the HECK of it I wanted to see if I could get a loan. Me and husband have been debating several options of living in a camper on the property and saving and paying cash for house vs just staying here(rental) and waiting and then getting a loan to built a modest home. We of course want and will live well below our means from here on out. BK scared the crap out of me. Well I figured what the heck and called to see what a loan company would say and how long I would have to wait to get one. I actually wanted to see if I could get pre approved after meeting certain criteria so we could seriously look at building companies without wasting their time and give the one we choose a time frame ( for example to start building next fall). Well the company said they would give us a construction loan ( we own the land to build on and it is worth 30,000) NOW but wants us to do some type of credit repair thing where we pay 1000 dollars and that can count as part of the down payment. Down required is 5700 for a 165,000 loan and the 1000 credit repair could be included. The rate is 51/4%. It doesn't sound bad but I'm just scared and certain I am missing something. They said the fee would help them get out scores up to where they need it at like 640. Now mine is 624 and hubbies is like 490. What do you all think of this????? Yes or No.

[oldhack]

At the very least, I would ask them to refer you to some local folks who've previously done what they're offering you, and check the details out thoroughly: interview the clients, check the real-estate records to see that the transactions really occurred, etc.
If you find any significant discrepency between what your were told, and what you find -- run!
(To me, anyway, the initial "smell test" on this -- mostly based on up-front cash outlay versus lender's contractual obligation -- screams SCAM! Nobody can guarantee you a particular 'credit-repair' result.)

[hereforinfo]

Scam. They are trying to charge you $1k to clean up your credit report, then they hope to find a bank who will finance you once that's done. However, there is nothing they can do to get the bankruptcy off your reports. Even IF they were successful in removing it from both reports (not likely at all) you would legally have to disclose the bankruptcy on the mortgage application. You cannot get a loan until 4 years post discharge. I am not sure if FHA does construction loans, but they only require 2 years.

[jal1129]

Construction loans are very hard to get these days. FHA does'nt do them. I'm pretty sure the only way to get one is by going conventional which requires 4 years post bk, I think.

[jal1129]

After thinking on this some more if I were you I would call this "company" back and ask some questions. What type of loan are they planning on getting you? FHA, conventional etc. If they say FHA say your understanding was that FHA does'nt do construction loans-see what they say. Ask how they plan to get around the BK guidelines. I am sure you know getting a mortgage is about a lot more than credit score, so even if they were to get your score up there would be many more hurdles. If they are legit they should be able to answer all of your questions directly and without hesitation.

Just looking back over your post again it looks like they are talking about an FHA loan. I am almost positive FHA does'nt do construction loans. I would really quiz them on that.

Come back and post what you find out because I would be very interested to hear what they have to say.

[username1223]

The person from the financial place offering this loan called back and my husband spoke to him. It was a scam. He could not answer our questions. I asked him what about the Bankruptcy as he was claiming it would be an FHA construction loan and I was sure that there is a waiting period. I also asked how they can fix our credit fast, it did not make sense. It has to take time and what we were paying for and he could not give straight answers. Thanks to all for your suggestions. After it was all done I was relieved we did not do it because we'd have gotten screwed I'm sure.