Buying 1st home 2 years after ch 7 discharge--Do we have a chance even if....

[Footprints1973]

Hello,

Ok, I will try to make this as short and sweet as possible. DH and I were discharged from Chapter 7 CK in Oct 2008. We have never owned a home...we've always rented. We are living in the same apartment we lived in before the BK.

We have recently inherited a decent sum of money. We are looking to a first home a few hours north from where we currently live, were it more rural and the houses are much cheaper. (We live in FLORIDA).

We have been looking at houses that are for sale for $45K-50K. We would make a downpayment of about 30K (most of the inheritance). That's a huge downpayment I think. With part of the inheritance, we are paying off our car loan and our daughter's pre-paid college fund. The only "debt" we would have then is from our secured credit card. It has a max of $1000 and we always pay off the balance...we barely use it.

Now here comes the problem....
My husband was laid off 9 months ago and has unable to find a job. He is receiving $275 unemployment benefits. Do not know if he will get an extension or not. I am working full time, making about 28k a year. I have been at my job 3 years.

My question is....with our 2 year old BK, a my husband being out of work, will we be able to get a home loan? Our down payment would be signifcant and I am currently working. We are currently paying $1025.00 for an apartment each month which I think is a waste of money. We really want to get a house. Are we crazy for thinking we can?

Any advice you could give would be great!
Footprints1973

[carlsbadmike]

I would think you should be able to get the mortgage based on the terms you've described.

[LSUTiger32]

Going to depend a lot on the debt to income ratios, but looking at these numbers no regular mortgage company will touch this loan. You need to go down to the local credit union and show them this deal. You are going to need to find a small local bank or credit union to do this loan because they will keep the loan in house or what is called a portfolio loan. A $20K loan on a $50K house is a pretty simple loan.....shouldn't be a big deal with the credit union unless you have other debt like a car loan or something. With your husband out of work you are going to be tight.

[Ugh07]

your debt numbers look fine, ironically the problem you could run into is the small loan size. Brokers wont touch it and even some banks wont go below 40k. Look around and you will find somebody, shouldnt be much of a problem.

[doudis2]

your debt numbers look fine, ironically the problem you could run into is the small loan size. Brokers wont touch it and even some banks wont go below 40k. Look around and you will find somebody, shouldnt be much of a problem.

Just thinking based on this reply; so if they want to loan 40K minimum, then put 10K down, borrow 40K, then make a HUGE first payment of 10K when the repayment starts

[Ugh07]

A borrower could definitely do just that, there are some drawbacks to doing it that way, but any conventional or FHA loan will have no penalty for prepayment.

[LSUTiger32]

A borrower could definitely do just that, there are some drawbacks to doing it that way, but any conventional or FHA loan will have no penalty for prepayment.

The problem is that it will require a down payment.

[Flamingo]

What is going to hurt you is your husband being unemployed. You may find it difficult to obtain a mortgage on your salary alone even with coming up with a lot of money on the house. I think what you want to do is excellent as to handling your finances and the inheritance but your husband's unemployment will probably be an issue. I would suggest finding a broker to help you out...a good start to obtain a reference is the attorney who handled your Chapter 7. Best of luck to you!

[tobee43]

Hello,

Ok, I will try to make this as short and sweet as possible. DH and I were discharged from Chapter 7 CK in Oct 2008. We have never owned a home...we've always rented. We are living in the same apartment we lived in before the BK.

We have recently inherited a decent sum of money. We are looking to a first home a few hours north from where we currently live, were it more rural and the houses are much cheaper. (We live in FLORIDA).

We have been looking at houses that are for sale for $45K-50K. We would make a downpayment of about 30K (most of the inheritance). That's a huge downpayment I think. With part of the inheritance, we are paying off our car loan and our daughter's pre-paid college fund. The only "debt" we would have then is from our secured credit card. It has a max of $1000 and we always pay off the balance...we barely use it.

Now here comes the problem....
My husband was laid off 9 months ago and has unable to find a job. He is receiving $275 unemployment benefits. Do not know if he will get an extension or not. I am working full time, making about 28k a year. I have been at my job 3 years.

My question is....with our 2 year old BK, a my husband being out of work, will we be able to get a home loan? Our down payment would be signifcant and I am currently working. We are currently paying $1025.00 for an apartment each month which I think is a waste of money. We really want to get a house. Are we crazy for thinking we can?

Any advice you could give would be great!
Footprints1973

no disrespect to flamingo...but one would think with that type of down payment, even IF you husband were unemployed you may have a great chance of getting this small mortgage.

if you have 70% down and you're only holding 20k....you actually may be able to qualify. i would try some of the local credit unions down here...OR...maybe even the bank you have been using since your discharge...with that large amount down...it's worth a shot!!

now...i'm going to tell you what happened to us...we went to see an atty about filing and he suggested we refinance via a "broker" he recommended...well, now that loan is one that is being examined by government as possible fraud.

if you want to use a mortgage broker...pick one yourself is what i would suggest...one you feel comfortable with and will help you get this mortgage...there are thousands here in florida that i'm certain would LOVE to help you get a shot at getting this house.

best of luck to you!! we will be trying it ourselves in about a year or two! make sure you let us know how you make out! it will be SO helpful to those looking to buy a house after BK!! i'll be waiting on pins and needles to hear what happens!!

[Flamingo]

no disrespect to flamingo...but one would think with that type of down payment, even IF you husband were unemployed you may have a great chance of getting this small mortgage.

if you have 70% down and you're only holding 20k....you actually may be able to qualify. i would try some of the local credit unions down here...OR...maybe even the bank you have been using since your discharge...with that large amount down...it's worth a shot!!

now...i'm going to tell you what happened to us...we went to see an atty about filing and he suggested we refinance via a "broker" he recommended...well, now that loan is one that is being examined by government as possible fraud.

if you want to use a mortgage broker...pick one yourself is what i would suggest...one you feel comfortable with and will help you get this mortgage...there are thousands here in florida that i'm certain would LOVE to help you get a shot at getting this house.

best of luck to you!! we will be trying it ourselves in about a year or two! make sure you let us know how you make out! it will be SO helpful to those looking to buy a house after BK!! i'll be waiting on pins and needles to hear what happens!!

Our attorney gave us an excellent broker reference to refinance during our Chapter 13 and he went beyond his duties in helping us even get a lower rate and got us the going rate for good credit at that time. That is why I suggested starting with one's attorney for a reference as they work with refinancings and mortgages all the time with folks in Chapter 13 or 7 and who might be able to help. Finding another broker through other sources is possible but they may not want to work with the OP due to the BK or the unemployment issue. Banks right now are not just lending to everyone so the OP needs a broker experienced with prior BK filers because as there is higher risk involved (facing five years of PMI if an FHA mortgage, much higher rates if conventional, etc., etc.). Not all brokers are crooks just like anyone else in business; as in anything, do your homework and check things out!

[tobee43]

Our attorney gave us an excellent broker reference to refinance during our Chapter 13 and he went beyond his duties in helping us even get a lower rate and got us the going rate for good credit at that time. That is why I suggested starting with one's attorney for a reference as they work with refinancings and mortgages all the time with folks in Chapter 13 or 7 and who might be able to help. Finding another broker through other sources is possible but they may not want to work with the OP due to the BK or the unemployment issue. Banks right now are not just lending to everyone so the OP needs a broker experienced with prior BK filers because as there is higher risk involved (facing five years of PMI if an FHA mortgage, much higher rates if conventional, etc., etc.). Not all brokers are crooks just like anyone else in business; as in anything, do your homework and check things out!

i very much agree and i'm so glad you had a great experience with the broker you worked with via your atty....we just had the opposite experience...however, that was in nj...where almost ALL experiences are terrible!!

of course all brokers are not crooks...i hope not! my daughter has been working with one...very creative indeed, my daughter could NOT sell her house and had to move, this creative broker sold her house with an option to buy...the couple is exactly in the same situation as the OP...the broker is attempting to assist these people to get a mortgage and is busting herself doing it...she couldn't be doing more to help these people.

and, on with respect to your point..about the banks not lending...we know people with PERFECT credit and they still cannot get a mortgage!! they had 30% down....they BOTH have good jobs that they have been at for over 10 years and at least 4 banks have slammed the door right in the faces...so, it's scary out there right now...i'm just waiting for the dust to settle ourselves...before we even attempt it!

[Floridagail]

I am thnking of doing the same, take out 50,000 from my 401 and buying a house. When we finally get kicked out of our home. I am 61, I dread the taxes, but to have a paid for place to live it may be worth it.
I have talked to several realtors, they have told me the banks are not lending. If you buy home under 75,000 purchase price it must be all cash, no financing. I have found some real deals nice homes for 40, 000 or 50,000. But by the time I decide to buy, the investors are grabbing them up like crazy here anyway.

[Tom_Mi]

First, GOOD JOB doing *smart* things with your inheritance. Most people run right down to the car dealership and spend it on something shiny. Buying a low-priced home and pre-paying college is excellent stuff and will give you great peace of mind in the future.


If you are looking into homes that are more 'rural', be sure to look into USDA loans. There are some threads about it or you can google 'florida usda lenders'.
-Lower-middle income is encouraged. Actually, we OVERqualify.
-Zero-low downpayment.
-they don't look much at credit history, as long as you have income.

Also, if you or your husband were in the military, a VA loan has the above benefits and only looks 2yrs back.

[Ugh07]

Banks are lending. Myself and other Loan Officers I know are having banner years. Production has tripled since last year. Yes, guidelines are MUCH tougher than they were in the mid 2000's but so were guidelines in every other time of history other than the mid 2000's.

There are certain dealbreakers of course: 1 day out of BK, not going to happen.
There are easy deals as well 660+ score, no BK, no foreclosure, verifiable income....NO PROBLEM