Buying a house after Bankruptcy

[bkdone]

Here is just my 2 cents...

Since the market isnt going to turn around any time soon...maybe you should wait another couple of months. The problem with getting a fixer-upper is that getting the loan is just one part of being a homeowner.

It is almost certain that after you get into the house, something will fail...the A/C...a water line...the appliances. Something unexpected...its the way of the house gods.

Right out of bankruptcy, the chances of being able to finance a major renovation or fixing a major problem are slim. By waiting just a bit longer, you can save a nice chunk of change and designate it as an emergency fund for the house. That way, if a disaster hits and you need a couple grand for repairs, you have it.

And, I'd recommend getting the home warranty that you can purchase with the mortgage. Its an extra $35 per month but if anything in the house breaks (A/C, appliances, plumbing...) you pay just a small service fee per incident, and they come and fix whatever. This is just a bit of peace of mind if you may not have the money saved for unexpected repairs.

Good luck to you.

PS... I just refinanced to get out of BK13. I used a mortgage broker (local) and I submitted one application and got several offers to choose from. The nice part of that is that there was only one credit inquiry on my report, and the process was pretty easy. We had been with Countrywide for 8 years and when it came time to refinance, they were the company with the highest fees and interest rate. Totally tried to scam us. So I say to you...SHOP AROUND FOR THE BEST DEAL. TRUST NO ONE...

[FilingOnMyOwn]

Yeah i'm saving cash like a stingy old lady right now; I could tighten up even more to hit damn near the 20% mark by feb for a decent house around here.

My friend's dad is a realtor and he was telling me about $70k houses in very decent condition in decent neighborhoods...I NEVER thought that I would see any of those in my lifetime...

Nice. What city do you live in/near?

[debtjumper]

Yeah i'm saving cash like a stingy old lady right now; I could tighten up even more to hit damn near the 20% mark by feb for a decent house around here.

My friend's dad is a realtor and he was telling me about $70k houses in very decent condition in decent neighborhoods...I NEVER thought that I would see any of those in my lifetime...

[HHM]

I give my advice in absolutes, but I understand there are caveats. The problem is, when people buy a house right out of BK, there are too many traps that lay ahead.

The main trap is the refi trap...generally speaking, if you refi a loan that is less than five years old (unless you refi to a 0% APR), you are losing money over the length of the loan.

FOMO has good advice. I'd add this, if you would have to take two mortgages to buy, then don't. I realize that probably means coming up with 20% down to avoid PMI (which you should avoid), but your better off in the long run. Also, your probably right, prices have probably bottomed, but they are not going to appreciate like they did a few years ago, price growth will be relatively low and stable over the next few years. So it's not like your going to miss out.

Despite your itch to get into the market, just be realistic.

[FilingOnMyOwn]

The questions you need to ask yourself are: How stable is your job? How long do I want to live in this area? Would I be able to find another job if needed and still be able to continue living there comfortably?

Remember, once you buy a house, you're stuck there. So if you are still wanting to buy knowing the answers to these questions, then why not? You can always refinance at a better interest rate in a couple years, provided rates don't go much higher (very unlikely). Then you can rent your bedrooms for $400 a month to other people, rather than paying other people $400 a month to rent theirs. Its getting to the point where it really can't get much worse in michigan, as far as housing goes - Its getting too cheap. Sooner or later, people who are retired or wealthy will start looking to Michigan for summer homes, just because its cheap there... Just like people buy winter homes in florida. And remember, real estate in michigan takes a major dip in january-february during the winter months. Its not outrageous to think that you could get a nice little starter fixer upper for 50k during this time frame. And have a mortgage of around $500.

[debtjumper]

Buying a house after BK

After reading what HHM wrote,

it just bugs me to see people rush right out to make major purchases on credit (i.e. house or car) just months out of BK. It makes little financial sense to do so since you end up with these lousy deals.

I question the value of purchasing a home right now. I reside in Michigan where home values have rapidly hit the deck. "Everyone" is now saying that it has bottomed out --- do I take HHM's advice or would buying a house now be like "polishing brass on the Titanic"?

I was discharged at the end of May and I'm just itchin to get my own place and stop renting (granted I only pay $400 total a month including utilities and cable-'net at my buddies house).

[HRx]

...

[Minnymouth]

Brokemommy - There are many reasons "why" people will let a house go in bankruptcy and then later purchase another...... but since you can't "comprehend" this, why explain it too you!! (giggle)

And Fedler, how many homes have you bought - "without" - MONEY, JOB, OR CREDIT? Yes, it takes money, job, and/or credit to buy a home and money to keep it!!!

Your comments offered "nothing" to this thread.........................

[brokemommy]

ANYONE can buy a house no matter if they have a job, money, or credit. Only those with one or more of the above get to keep that house.

That is an awesome post Fedler, can't stop giggling about it. I can't comprehend people that lose there home and then go back out and buy another one shortly after.

[Fedler]

ANYONE can buy a house no matter if they have a job, money, or credit. Only those with one or more of the above get to keep that house.

[Isellhomes]

There's a mortgage out there for everyone...

It has been my experience over the years that because so many of us are in over our heads in debt, almost every lender out there has made a loan program that can pretty much suit your individual needs.

For instance, if you go with a Limited Income Verification program your rate will be higher, but you wont have to show W2's, pay checks, Verification of Rent or a mortgage (incase youve been late!). You do need to show 6 months of bank statements so be prepared to have 3 months of mortgage payments in there!!!But if your credit score is 640+ , you can borrow 100% without PMI! if your score is below 640 but above 580, you will probably be approved for 80% of the purchase price!

So many subprime lenders DO NOT require any seasoning on discharged Bk's!

So really, there truly is a loan out there, you need to find the right Broker. Try places that friends or family have used, ask around. BUT REMEMBER DONT EVER GIVE YOUR SS# ON THE INTERNET TO ANY COMPANY! Sure they'll shop for the rate for you, but it will be at your credit's expense!!!

[MTG_BANKER_OH]

I've been wondering about the same thing too, Miss P.

We went thru all the lates, Notice of Default and Acceleration, and the actual Foreclosure process. We got a last minute offer that literally saved us on the day the Foreclosure Auction was supposed to take place. Our Foreclosure Tech called the Courthouse and stopped the Auction from happening. We've since sold and closed with the buyers.

I've PM'd a couple of the Lender Reps that post on here about our situation.

I want to know if we really saved ourselves anything or not, Credit wise, by selling the house ourselves.

I've read at several Credit reporting websites, you get dinged for the lates, you get dinged for the Notice of Default and Acceleration, you get dinged when your property is moved into Foreclosure. The only thing we dodged in the way of dings was the actual Foreclosure itself.

Did selling the property ourselves really salvage anything on our Credit??

But of course, the Mortgage Reps that post here never check their PM's. So I haven't gotten an answer to my question.

On your situation did you do a short sale or did you sell it for what you owe? The problem is once your mortgage goes 120 days late it is considered a foreclosure no matter if it went into foreclosure or not. It is negligible whether you saved anything on your credit, by selling it your self you may have saved youself a year or more of nevative credit, many times they report the mortgage late until they sell the home at sheriff auction, in many cases they usually buy thier property back at auction so they can collect on the mortgage insurance, they they put it back up for sale. If you filed for BK and did not include the home in the BK then lost it it is counted as 2 separate instances. If anyone is filing BK and they do not think they can save the home after the fact they are probably going to be better off including the home in the BK and having it discharged through the BK. You can buy a home less then a year after this happens, or you can buy a home with a conforming loan 2 years out on a my community loan. FHA needs 3 years from date of sale of the home.

[MTG_BANKER_OH]

I used First Franklin (a division of National City). I make 40K a year and was approved for 100% financing for 182K within 30 days of my Ch. 7 discharge. I pay 6.75% on ~146K (it's an interest only loan) and 11% (interest and equity) on the remaining 36K. My payments are 819 and 346, respectively.

My FICO scores at that time were 575-605. They are now 675-705 and I will refinance at the end of this year. Once you reach 2 years past BK, you can qualify for non-subprime lending. That is, of course, assuming your credit history since the BK has been impeccable.

The only problem with the loan with First Franklin is there is usually a prepayment penalty 3% for the first year and 2% for the second year if you are doing a 2 year fixed, If you have a 30 year fixed you may not want to do anything, ocnsiderinf that is where rates are currently. For a conforminng 30 year fixed.

[Kim21]

I used First Franklin (a division of National City). I make 40K a year and was approved for 100% financing for 182K within 30 days of my Ch. 7 discharge. I pay 6.75% on ~146K (it's an interest only loan) and 11% (interest and equity) on the remaining 36K. My payments are 819 and 346, respectively.

My FICO scores at that time were 575-605. They are now 675-705 and I will refinance at the end of this year. Once you reach 2 years past BK, you can qualify for non-subprime lending. That is, of course, assuming your credit history since the BK has been impeccable.

[Allen Greenspan]

Buying or Refinancing After BK

I'm amazed at all the misconceptions on getting credit after BK. I think that folks in the lending industry perpetuate these misconceptions in order to charge folks higher fees.
You can buy or refi 12 months out of BK and will pay a higher rate, but high fees are not part of the actual deal.
There are lenders that will go 90% loan to value 1 year out of BK.

If your loan person want to charge you more than 1% of the loan amount, find another loan person.

Brokers will serve better than Bankers if you find a good one. You can tell by looking at their licence. If the license says BK########--it is a banker and you may pay more. If the license says BR###### it is a broker and if it is a good one, you can save a ton of money in rate and fees.

Don't buy into the misconseptions that will lead you to pay more fees--have your broker show you the rate sheet, and secondly be prepared to get more than one offer.

For example GMAC (recently purchased by Homecoming Financial) has a niche lending to folks 1 yr after BK, but several smaller lenders sell their loans to GMAC and give the client a lower rate based on bulk purchasing power.

Even folks facing forclosure can get a decent loan if they have not gone more than 120 days late.

My mother lost our family home to forclosure after her BK in 1984, and based on what I've learned since then, she had many options and did not have to loose the home. It makes me sick......

Allen Greenspan