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Didn’t reaffirm and want to buy a rental

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    Didn’t reaffirm and want to buy a rental

    Filed chapter 7 last year it was discharged in August. Our mortgage was not reaffirmed. In a year or so we would like to buy a rental property, how does this affect the buying process for qualifications . Can we not claim our current home? Our debt to income ratio is less then 15% without including our current mortgage. And our credit score has recovered to 700 already. Is our current mortgage basically a ghost loan?

    #2
    Your mortgage is not a ghost loan as a check of the records should show that you own the property. You should disclose that you own the current property and that you have a mortgage. The underwriters will likely figure this out anyhow.

    As for qualifying for a rental property, those loans tend to be more stringent. As you may be aware, you will likely need a large down payment and the ratios will probably be tight. Additionally, you will likely need very good scores (maybe over 720-740) to get the best terms or to even qualify. The real problem may be that you need at least 2 years since your discharge for obtaining some of the GSE (government sponsored entity) loans (think Fannie Mae and Freddie Mac). Conventional loans may be a problem as I think they need at least 4 years since discharge.

    You may be able to do an FHA loan, but I believe they only allow those for true second homes (and not speculative investment homes). FHA is more lenient on their lending practices (allowing scores of 580 and sometimes below), but they only allow primary residences (with some exceptions for those that have to move due to work or something else).

    Your discharged loan is probably still reported on one of the credit bureaus. The underwriter or the underwriting system will likely see this anyhow and you'll have to explain the disposition of that property.
    Chapter 7 (No Asset/Non-Consumer) Filed (Pro Se) 7/08 (converted from Chapter 13 - 2/10)
    Status: (Auto) Discharged and Closed! 5/10
    Visit My BKForum Blog: justbroke's Blog


    I am not an attorney. Any advice provided is not legal advice.

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      #3
      Thank you justbroke. 👍it was a bit confusing to me. So far our mortgage isn’t being reported on any of the 3 bureaus. That’s why I thought it was strange.

      Comment


        #4
        Originally posted by Cassandraca View Post
        Thank you justbroke. 👍it was a bit confusing to me. So far our mortgage isn’t being reported on any of the 3 bureaus. That’s why I thought it was strange.
        You're lucky. Mine fell off my report as well, but I clearly still had a mortgage shown in the public records.

        Chapter 7 (No Asset/Non-Consumer) Filed (Pro Se) 7/08 (converted from Chapter 13 - 2/10)
        Status: (Auto) Discharged and Closed! 5/10
        Visit My BKForum Blog: justbroke's Blog


        I am not an attorney. Any advice provided is not legal advice.

        Comment

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