MTG_BANKER_OH: Question on FHA & Chpt. 13

[chpxiii]

I read your note on the last page of this thread:

http://www.bankruptcyforum.com/showthread.php?t=103&page=7

I have some questions regarding that post:
From your note, I surmise that a person can get an FHA home loan one year after filing for Chapter 13 even though that person is still paying on the plan. Is that correct?

The person, if they have shown atleast 1 year of on time payments to their chapter 13 plan, this then demonstrates their ability to manage their financial affairs and they can then qualify for an FHA home loan. Is this correct?

As for my case specifically:
I filed Chapter 13 June of 2003 for a 60 months plan. I have been late one time in my 2nd year, but it was not more than 30 days. I have paid every single month for the last 4 years. While I am due to complete my plan in June of 2008 (or is that July? regardless), I plan on paying off the balance by September 2007 (this year.) That is approximately 9 months earlier than originally planned. I plan on immediately rebuilding my credit. I will also have student loans I need to start paying on at that time.

Now for my questions on my case:
Once I pay off my plan, will I be eligible for an FHA home loan?
What sort of interest rates can I expect?
Will interest rates be dependent on my FICO scores?
Will I have to wait a year after having my case discharged and closed before I can file for an FHA loan?

Thank you for your time. If it means anything, I am in Dallas, TX.

[BassBoy]

chpxiii,
I have moved your thread to the Mortgage After BK section as it will receive better responses here.

[chpxiii]

Right-o BassBoy.

[MTG_BANKER_OH]

I read your note on the last page of this thread:

http://www.bankruptcyforum.com/showthread.php?t=103&page=7

I have some questions regarding that post:
From your note, I surmise that a person can get an FHA home loan one year after filing for Chapter 13 even though that person is still paying on the plan. Is that correct?

The person, if they have shown atleast 1 year of on time payments to their chapter 13 plan, this then demonstrates their ability to manage their financial affairs and they can then qualify for an FHA home loan. Is this correct?

As for my case specifically:
I filed Chapter 13 June of 2003 for a 60 months plan. I have been late one time in my 2nd year, but it was not more than 30 days. I have paid every single month for the last 4 years. While I am due to complete my plan in June of 2008 (or is that July? regardless), I plan on paying off the balance by September 2007 (this year.) That is approximately 9 months earlier than originally planned. I plan on immediately rebuilding my credit. I will also have student loans I need to start paying on at that time.

Now for my questions on my case:
Once I pay off my plan, will I be eligible for an FHA home loan?

You should be eligible for an FHA loan or a few other types of loans as well. You are probably eligible now. You would just have to have court approval.

What sort of interest rates can I expect?
Currently rates have gone up probably upper 6's to low 7's depending on who you talk to.
Will interest rates be dependent on my FICO scores? No, FHA is not score driven.
Will I have to wait a year after having my case discharged and closed before I can file for an FHA loan? No, some people are eligible 12 months out. If the credit was very bad before the BK then sometimes 2 years.

Thank you for your time. If it means anything, I am in Dallas, TX.

I am sorry this is a quick answer i am leaving for vacation, as we speak.

[chpxiii]

I hope you're enjoying your vacation!

[yburgin]

MTG Banker OH-

Hello, and thanks for being so helpful on the boards. I would like to get your input as well.

I filed for Cpt 7 on 4/17/07 and will be discharged 7/26/07. My lease is up on the house dh and I rent 10/01/07. The owners have expressed they will not be renewing our lease. I am very anxious to buy a house, and be out of this renting trap in which I am at the mercy of the homeowner and I have read everything you said about waiting 2 years, but I cannot.
My credit scores are as following as of 6/22/07:
Experian - 642
Equifax - 567
Transunion- 597

Experian is the only report that shows the Chase Visa that I am an authorized user on, with may explain the difference. All reports show the BK, Experian is completely accurate with all accounts repoting 0 balance and included in BK.(with the exception of Chase which is current and have a long positive history). The other two I disputed all incorrect info on 6/22, which was mostly the balances did not show 0.
I have pleanty of older credit history that is positive and paid as agreed.

Where should I start? How likely is it that I would be 100% financed in a fixed rate mortgage? Is a 8-9% rate an unrealistic expectation?
This would be my first time buying and I am in NC.
Thanks for any and all input.

[chpxiii]

Nick Kusan,

I hope you don't mind me "bumping" this thread up. I still have these questions and if you have sometime, would appreciate an answer, if you don't mind.

I just found out my FICO scores I would like to add that bit of information.

Equifax: 609
Experian: 638
Transunion: 610

I do have student loans that I will resume payment on. I don't believe I am in default and so I think I am ok there.

Thank you for your time.

[MTG_BANKER_OH]

Nick Kusan,

I hope you don't mind me "bumping" this thread up. I still have these questions and if you have sometime, would appreciate an answer, if you don't mind.

I just found out my FICO scores I would like to add that bit of information.

Equifax: 609
Experian: 638
Transunion: 610

I do have student loans that I will resume payment on. I don't believe I am in default and so I think I am ok there.

Thank you for your time.

Ok you might qualify for an FHA loan at this point as long as your loan is under the FHA limits in your area. The down payment assistance from the seller is gone after this month on FHA so you might need 3% of your own money on this. There is a loophole with one company where they can still offer the DPA until april or march of next year, I have not determined whether most lenders will still accept this after this month or not no matter what. There are many changes with FHA lately and they are still trying to revamp the program so things could change next month. There is a push for FHA zero down and higher loan limits could possible by higher then Fannie/Freddie which is 417k, this is all speculation currently.

I would say apply with someone that knows FHA well and they shoud be able to get you approved with a manual underwrite as long as the income is there and credit was clean during the chapter 13 no other collections etc..

[chpxiii]

Thank you. I do have some credit clean up to do that I didn't realize were there. *sigh* I do have 2 collections. I'll be working on getting that corrected.

The more I think about this, I'm thinking maybe not for another year and I plan on saving up, hopefully, 10% down.

[B12]

Another reason to wait until you have down money is to avoid the PMI payment which can be a substantial amount of money added to the monthly mortgage payment.

The best scenario would be to have 20% down which completely eliminates the PMI. (private mortgage insurance)

My advice if you want to purchase without 20% down is to go FHA, (remember though there is a cap on the amount), or get a primary mortgage with a "soft second."

Essentially you are borrowing the other 10% down as a soft second loan. It would be like having a first lien with a home equity loan.

The advantage to the soft second over the PMI payment is that the soft second interest is tax deductible in most states whereas the PMI money is money out the window.

[MTG_BANKER_OH]

Another reason to wait until you have down money is to avoid the PMI payment which can be a substantial amount of money added to the monthly mortgage payment.

The best scenario would be to have 20% down which completely eliminates the PMI. (private mortgage insurance)

My advice if you want to purchase without 20% down is to go FHA, (remember though there is a cap on the amount), or get a primary mortgage with a "soft second."

Essentially you are borrowing the other 10% down as a soft second loan. It would be like having a first lien with a home equity loan.

The advantage to the soft second over the PMI payment is that the soft second interest is tax deductible in most states whereas the PMI money is money out the window.

The PMI is tax deductible this year, I do not know if they have made a ruling about next year. PMI is not a bad thing, if there was no PMI we basically would not have loans over 80% out there. The 80/20's are a thing of the past as most second mortgage lenders have stopped going to 100% or you get a bad rate and y ou have to have credit over 700. Many lenders are loosing their shrits over alot of the 80/10 they ahve done in the past fewyears because theloans were not insured and tehy were doing the first and second mortgage so they were taking all of the risk on an uninsured loan. You more then likely are going to have to get a loan with a one loan type product, second mortgage lenders are more picky about credit and like to see the BK discharged for about 4 years. I would try and save up some money and try at that point the process will be much easier for you. Loan appications look much better when someone has money saved in the bank.

[chpxiii]

20%! That's it! I had a feeling it was a higher amount than 10%. My bad.

Considering my salary and current rent and shared expensives, I can, and plan on saving, atleast 20% down.

If I have 20% down, would I even need an FHA? I've been told that you only get one FHA loan (unless your family grows and I don't anticipat that happening). So, if I have the 20%, should I even bother with an FHA? Or should I wait to use that at a later time incase I wish I purchase a different house?

[B12]

I had heard that PMI was tax deductible this year, never checked it out, unbelieveable. I always thought it should be tax deductible.

chapxiii, with 20% down you can pretty much get any type loan if your credit is good.

But, don't give up on FHA if you can find a house that qualifies within the cap. Either way, you are good to go.

There are still 80/10/10 loans out there. The primary plus the second.

80/20 borrowed are pretty well dried up and I am not sorry to see them go.

[FHAinfoCenter]

One misconception about FHA is that it is for one time use, this is WRONG.... You can use FHA many times, it is not a one time thing. You can use it to purchase or refinance. It is NOT just for first time homebuyers, it is available to help a LOT more than that.

You can get an FHA loan WHILE IN A CHAPTER 13 BK, you don't need to wait for it to discharge. It is 12 months from FILE date and all payments to the trustee need to be paid on time. The trustee would also have to approve you getting the loan as well.

In your case I would NOT wait another year, the mortgage market is changing rapidly, rates can be significantly higher in a year than today and the lenders can get even more rigid with guidelines. It takes less than a few weeks to get pre-approved with a lender, that way you know for sure if you qualify and for what.

As for 20% to avoid PMI, that only works for conventional loans and with your credit scores your rate conventional will be significantly higher than FHA. FHA will have PMI for 5 years no matter what you put down UNLESS you do a 15 year fixed loan (10% down on a 15 year avoids PMI!!). I am a HUGE proponent of putting down as little as you can and keep a LARGE CASH reserve for a rainy day.

And for the person who filed a chapter 7, I hope you did not get a subprime loan, you will need to wait just 2 years from discharge, pay those bills on time and you should be in good shape early 2009 to qualify for an FHA loan.

Best of luck to all.

[Logan]

One misconception about FHA is that it is for one time use, this is WRONG.... You can use FHA many times, it is not a one time thing. You can use it to purchase or refinance. It is NOT just for first time homebuyers, it is available to help a LOT more than that.

You can get an FHA loan WHILE IN A CHAPTER 13 BK, you don't need to wait for it to discharge. It is 12 months from FILE date and all payments to the trustee need to be paid on time. The trustee would also have to approve you getting the loan as well.

In your case I would NOT wait another year, the mortgage market is changing rapidly, rates can be significantly higher in a year than today and the lenders can get even more rigid with guidelines. It takes less than a few weeks to get pre-approved with a lender, that way you know for sure if you qualify and for what.

As for 20% to avoid PMI, that only works for conventional loans and with your credit scores your rate conventional will be significantly higher than FHA. FHA will have PMI for 5 years no matter what you put down UNLESS you do a 15 year fixed loan (10% down on a 15 year avoids PMI!!). I am a HUGE proponent of putting down as little as you can and keep a LARGE CASH reserve for a rainy day.

And for the person who filed a chapter 7, I hope you did not get a subprime loan, you will need to wait just 2 years from discharge, pay those bills on time and you should be in good shape early 2009 to qualify for an FHA loan.

Best of luck to all.

If money gets tighter then the market will continue to slide. Not a good reason to buy now. Also, a rise in interest rates can also slow the recovery of the market. If rates go up then payments will be higher so less buyers so more downward pressure on the market.

Bottom line is there is no perfect time to buy so the only real time is when you can get into a loan with a minimum of 5 years fixed and you can qualify based on your income not your stated income.

Logan