Buying a house after Bankruptcy

[Laurie77]

My husband and I filed Ch 7 in Jan. 2011 and we were discharged in April 2011. We are waiting for the 2 year mark before we buy a home because that is what two lenders told us we have to do. Also, from what I'm reading online, a large down payment would help if we wanted to buy sooner, but we won't have that. We'll do around 5-10% down. But our FICO scores never dropped below 600. I guess we are the lucky ones from what I'm seeing. Before the BK our scores were around 710. After the BK the lowest they went was around 605. Right now they are in the 640-650 range. I guess because we never had any late payments. We were able to make all of our minimum payments, but we had no money for much else. At that rate, it would have taken us forever to pay off the debt and it was over $40,000 total between the two of us just on credit cards. I spent 22 months unemployed and we were just barely staying afloat. We just needed a fresh start and to be free of that debt or we would not have been able to move forward with our lives for a very long time. We now have one credit card that has less than $2,000 on it and I have student loans that I have never been late on. After the BK, we also financed a car through our credit union with an 8% interest rate. I was expecting near 20% from the horror stories I had read. I know 8% is not the ideal rate, but pretty darn good after a BK. That's the rate I got on my first auto purchase when I was 22 years old and didn't have much credit at all. So I'm confident we'll be able to purchase a new home at the 2 year mark. We shall see.

[denisec]

No hurry Marcer, but wasn't sure if you had already sent me a private message? I checked and there wasn't one there...just letting you know..thanks!

[marcer]

You are very welcome!! I will remain available if you any questions.. YES YOU CAN :-)

[denisec]

Great thank you so much!

[marcer]

Thanks I will start the preapproval process. btw are you in WA state, and would you be potential someone to start the process with? I am in Kitsap County..

Awesome for you Denisec! I am in Washington state.

I would be more than happy to refer you to someone in your area. I am able to provide services nationwide, but due to your particular circumstances, I think it best if you worked with someone more local. My offices are in Federal Way.

I sent you a private message. Feel free to follow those instructions and I'll make certain to connect you with a person that will give you the right advise and who will fully understands your situation...more importantly, understands guidelines. I am a bit bias, so the person will come from my company :-)

[denisec]

I don't know what FHA rep you spoke to or from what center. I've called in to question a guideline which was questionable and can tell you that a few of them just read from the 4155. And as mentioned earlier...some lenders do have overlays which limit their risk of buy backs by adding additional requirements to the guidelines. Couple this with the fact many loan officers have been in business less than 5-9 years, and are only familiar with FHA the last 4 years. Some un-educated loan officers actually call FHA the new subprime.

I would most certainly start the pre-approval process. It will at least give you a clearer idea than posting on this board and potentially receiving mis-information.

Just keep this in mind. It will not be easy, it will not be a walk in the park, you will get frustrated, you will feel like the lender is asking for two much, but you very well may be a home owner again.

I mentioned yesterday, that one of my recent clients was in a similiar situation. BK in 2010 with included 1st and 2nd included. Bk seasoned through 02/2012. Pre-approved 02/2012 with 635 midddle credit score. Offer made on new home 03/2012. Loan approval issued 03/2012 with 2% down----special program, also approved 203b with 3.5% down. Final Clear to Close issued 03/2012 and borrower will move in early 04/2012.

I don't tell the story above to boast or prove everyone wrong...I tell it because it's true and you have the potential to realize the same opportunity

Thanks I will start the preapproval process. btw are you in WA state, and would you be potential someone to start the process with? I am in Kitsap County..

[marcer]

Thank you for your comment

Mercer.. I'd just like to say thank you for posting this information, not only was it very helpfull and in great detail, it gives me hope that maybe one day my family and I can own a home again. I'm currently in a rental been here going on three years I've paid my rent on time. After I lost my home, I said to myself I never want to own a home a again ! I'll just stick to renting, well as time goes by and healing begins, I realize that I'd like to own again someday .. Not tomorrow .. but someday With your thread, it gave me hope that "YES I CAN " own a home again !

Thank you !

RainMom~

thank you so very much for your comment; I really appreciate it. If I can help one person with the information provided...I will feel absolutely great! I found this forum while I was looking for information regarding exceptions for the use of income, read a post which was incorrect, and felt I needed to join so that i could provide accurate and helpful information. Your comment has made my day....Thank you again YES YOU CAN!

[RainMoM]

Mercer.. I'd just like to say thank you for posting this information, not only was it very helpfull and in great detail, it gives me hope that maybe one day my family and I can own a home again. I'm currently in a rental been here going on three years I've paid my rent on time. After I lost my home, I said to myself I never want to own a home a again ! I'll just stick to renting, well as time goes by and healing begins, I realize that I'd like to own again someday .. Not tomorrow .. but someday With your thread, it gave me hope that "YES I CAN " own a home again !

Thank you !

[marcer]

Thanks Marcer, I wish I talked to you earlier, I have been so confused with all the different answers, i even talked to an FHA rep and a mortgage broker..anyway water under the bridge..so it looks like I could just be given a notice to vacate this house, since Bank of America doesn't have to go through the normal foreclosure process, talk about "ignorance is bliss', as I have been sitting in this house not knowing I could be kicked out at any time. I was thinking the process was NOD and then around 4 months but looks like that was not correct..yikes..would I get some kind of notice before that happens? Or would I get a sale date for the house? Now I am a bit worried...This was a Countrywide loan that went BoA, and you know the mess that has been, perhaps that is why the delay?

I don't know what FHA rep you spoke to or from what center. I've called in to question a guideline which was questionable and can tell you that a few of them just read from the 4155. And as mentioned earlier...some lenders do have overlays which limit their risk of buy backs by adding additional requirements to the guidelines. Couple this with the fact many loan officers have been in business less than 5-9 years, and are only familiar with FHA the last 4 years. Some un-educated loan officers actually call FHA the new subprime.

I would most certainly start the pre-approval process. It will at least give you a clearer idea than posting on this board and potentially receiving mis-information.

Just keep this in mind. It will not be easy, it will not be a walk in the park, you will get frustrated, you will feel like the lender is asking for two much, but you very well may be a home owner again.

I mentioned yesterday, that one of my recent clients was in a similiar situation. BK in 2010 with included 1st and 2nd included. Bk seasoned through 02/2012. Pre-approved 02/2012 with 635 midddle credit score. Offer made on new home 03/2012. Loan approval issued 03/2012 with 2% down----special program, also approved 203b with 3.5% down. Final Clear to Close issued 03/2012 and borrower will move in early 04/2012.

I don't tell the story above to boast or prove everyone wrong...I tell it because it's true and you have the potential to realize the same opportunity

[denisec]

I am thinking maybe....I need to see if I can get preapproved now, and if not very quickly get into a rental house...sorry for all the posts, but finally I found someone who has a clue.....:-)

[denisec]

Missed this post, sorry. You may be okay...seriously. Rental history is very important, but may be overlooked with other factors. We see many 1st time home buyers choosing to live with mom and dad in order to save up. I know this isn't the case with you, but you may be able to get around the rental requirement. See my other post on basic information needed.

Thanks Marcer, I wish I talked to you earlier, I have been so confused with all the different answers, i even talked to an FHA rep and a mortgage broker..anyway water under the bridge..so it looks like I could just be given a notice to vacate this house, since Bank of America doesn't have to go through the normal foreclosure process, talk about "ignorance is bliss', as I have been sitting in this house not knowing I could be kicked out at any time. I was thinking the process was NOD and then around 4 months but looks like that was not correct..yikes..would I get some kind of notice before that happens? Or would I get a sale date for the house? Now I am a bit worried...This was a Countrywide loan that went BoA, and you know the mess that has been, perhaps that is why the delay?

[marcer]

As far as other tradeline i have 3 credit cards post bk, a used auto loan paid off, and student loan paid off...perfect credit since discharge, problem will be lack of rental history post bk, so looks like that's the next step.there's a decent rental house coming on the market soon, so I am going to try for that ...

Missed this post, sorry. You may be okay...seriously. Rental history is very important, but may be overlooked with other factors. We see many 1st time home buyers choosing to live with mom and dad in order to save up. I know this isn't the case with you, but you may be able to get around the rental requirement. See my other post on basic information needed.

[marcer]

Ok there's the rub, I knew there was one somewhere..Looks like I will have to go rent for a year before I can get financing...Why did I stay in the home? Because I saved money to get on my feet, paid off my student loan and got solvent, now I am debt free..and have some savings....
As you know, foreclosures are taking years, and I don't even have a NOD yet...but looks like I have to go get a rental like NOW!

That is the rub. Sorry to present you with bad news. I completely understand your reasons for continuing to live in the home psot bk. Forget about the foreclosure and NOD. They cannot foreclose or issue you a Notice of Default since your obligation was ended through your bk. You don't owe anything and there is no one to foreclose on. The bank was awarded the property back once you discharged. You have a bk only and NOT a foreclosure :-) If you are able, find an affordable rental and get into it for a year. Pay your insurance and all utilities on time. When the time comes, plan on purchasing a home with PITI payments no greater than 125% of what you will be paying in rent. I would recommend 110-15%

[denisec]

Mortgage included in discharge requires 2 years only. Technically, you could have started pursuing fha financing 07/2011. You do not need the 3 years.

Yes, You would be required to show proof of either rental or mortgage history. The fact that you've remained in the same home which you discharged through chapter 7 is puzzling. Why did you?

All lenders will require re-established tradelines post bk. For limited credit post bk, FHA will allow for alternative tradelines from two groups.

Group1: would include---pay here auto loan. Rental history documented by either 12 mos. cancelled checks or VOR from 3rd party management company and others

Group 2: would include ---utility reference, insurance reference and others

Need at least one group 1 and two from group 2.

I am a lender and have been for 17 years

As far as other tradeline i have 3 credit cards post bk, a used auto loan paid off, and student loan paid off...perfect credit since discharge, problem will be lack of rental history post bk, so looks like that's the next step.there's a decent rental house coming on the market soon, so I am going to try for that ...

[denisec]

Mortgage included in discharge requires 2 years only. Technically, you could have started pursuing fha financing 07/2011. You do not need the 3 years.

Yes, You would be required to show proof of either rental or mortgage history. The fact that you've remained in the same home which you discharged through chapter 7 is puzzling. Why did you?

All lenders will require re-established tradelines post bk. For limited credit post bk, FHA will allow for alternative tradelines from two groups.

Group1: would include---pay here auto loan. Rental history documented by either 12 mos. cancelled checks or VOR from 3rd party management company and others

Group 2: would include ---utility reference, insurance reference and others

Need at least one group 1 and two from group 2.

I am a lender and have been for 17 years

Ok there's the rub, I knew there was one somewhere..Looks like I will have to go rent for a year before I can get financing...Why did I stay in the home? Because I saved money to get on my feet, paid off my student loan and got solvent, now I am debt free..and have some savings....
As you know, foreclosures are taking years, and I don't even have a NOD yet...but looks like I have to go get a rental like NOW!