Buying a Home post BK 6 years out

[schel]

Hello been a while since I have been here. Have a question for you all maybe will know maybe will not. 3 years ago husband lost his job and had to find another job paying much less than what we were bringing in originally. So like a slap in the face after BK... long story short, we never reaffirmed our mortgage and we were going to let it go back to the bank because one income, mine was not enough to make it with the house payment where we were so we quit making payments. Went almost a year this way. Wells Fargo came back and offered us an adjustment on our mortgage lowering the payment and throwing what we had not paid with fines on the end of the mortgage, making our mortgage pretty much a 40 YR mortgage. We still have not reaffirmed it, and are making the minimum payments they set up living there still. Our payments are not reported to the credit bureau and the house needs so much work I would like to move on but my husband wants to stay, he says it is cheaper than rent. We pay $1039.19 per month, but most of it is interest and escrow, so hardly any goes to the princepal. My complaint is that we are not getting credit for paying our mortgage and our not getting any younger. I would like to move out and into something smaller. Since we did not reaffirm can we still walk away from it due to our BK? Would that hurt our credit again?... I really do not know how this would work and want to know if anyone else has been there done that.. Thanks...

[LadyInTheRed]

If you walk away, the default on your mortgage should not appear on your credit report. But, my understanding is that as long as the home is in your name, when you apply for a new mortgage, you will have to show the potential lender that you have sufficient income to pay the old and new mortgage. If you can't do that, you will have to wait until the current lender forecloses. So, you should consider stopping mortgage payments and continuing to live in the house until the lender forecloses. This could take several months or several years during which you can save money for a future down payment or rent. If you pay HOA fees, you must continue to pay them until foreclosure because your obligation to pay ongoing HOA fees is not discharged. The foreclosure will be a public record and potential future lenders will know about it even if the default is not on your credit report. My understanding is that FHA guidelines allow a mortgage 2 years after BK discharge, even if the foreclosure on the home was later. But, lender requirements will vary.

[schel]

Thank you.