Fha After Bk

[sick of debt]

JUST CURIOUS, HOW LONG AFTER DISCHARGE FROM A C7 CAN YOU GET AN FHA? I AM NOT EVEN NEAR THAT STAGE, I WILL FILE ON THURSDAY. I HAVE READ 2 YEARS AND 3 YEARS. DOES IT MAKE A DIFFERENCE IF YOUR HOUSE WENT INTO FORECLOSURE. I KNOW THAT 2 YEARS IS A NOT RIGHT AROUND THE CORNER, BUT I THOUGHT I WOULD START GETTING MY FEELERS OUT.

[liveandlearn]

Two years. But, if you have one late payment then that can cause the time frame to be extended. If you foreclosed, I think many things in the lending industry want 3 years after foreclosure, not sure about FHA. Go to the city-data.com Mortgage forum. Lots of help there!

BTW, we should close on a house on Thursday. We worked to bring credit score up. Have solid good credit score, had about 15% down on a house, house was only about 2 years salary, and our debt-to-income ratio was 5%. Guess what? The PMI company of one lender denied us BECAUSE WE DIDN'T HAVE ENOUGH DEBT! They said that we hadn't shown the ability to make monthly payments after our bankruptcy. We have had about 5 small loans, one being a car loan we paid off in just over a year. These loans were mainly bring-up-the-score loans. WE had $50K in the bank and only student loan debt, *and they said we might not be able to pay*!! I never thought I'd be denied a mortgage after bankruptcy because my debt level wasn't high enough!

And, BTW, another lender is giving us a loan with PMI and only 10% down, fantastic interest rate, no problems. When you go to buy a house, cast your net far and wide. Check out the rules that allow mortgage people to check your credit within a certain timelimit and it all counts as one credit check (rather than 7, if 7 pulled your credit). Then apply with many many many many lenders. It all depends on the underwriter, and if he/she liked her coffee that morning.

[BassBoy]

With FHA, if you surrendered the home in the BK, FHA will not look at that as a foreclosure, so long as the house was not in foreclosure at the time you filed your BK, the rule is 2 years post discharge with a minumum credit score of 580, along with some rebuilding being done. Otherwise, the rule is 3 years post discharge.

[Stilltheone]

I am also curious about this.

We already have plans to build a house in 2 years and am interested how that would work for an FHA loan. Our builder has a program where you basically take the loan out ahead of time and finish it when the home it done...to avoid a construction loan.

We are keeping our current house and have NEVER been late on it in the past 3 years we've owned it.

I am planning on saving at least 10% ($30K) down in the next 2 years.

Any other advice/info would be appreciated!!

[Flamingo]

I am also curious about this.

We already have plans to build a house in 2 years and am interested how that would work for an FHA loan. Our builder has a program where you basically take the loan out ahead of time and finish it when the home it done...to avoid a construction loan.

We are keeping our current house and have NEVER been late on it in the past 3 years we've owned it.

I am planning on saving at least 10% ($30K) down in the next 2 years.

Any other advice/info would be appreciated!!

Unless the market changes in two years getting a mortgage with a BK on one's record will be much more tougher than it was. No one can say for sure if your plan will work and that you will be able to get decent financing. Having a BK on one's credit report (as we all eventually find out) can be more damning than one expects so the best thing for you to do is after your discharge, do not be late with anything, keep your credit inquiries down and see what the market is like in a few years. Hopefully things will get better in the market by that time allowing mortgagors to be less choosey and pickey in granting mortgages.

[Stilltheone]

Unless the market changes in two years getting a mortgage with a BK on one's record will be much more tougher than it was. No one can say for sure if your plan will work and that you will be able to get decent financing. Having a BK on one's credit report (as we all eventually find out) can be more damning than one expects so the best thing for you to do is after your discharge, do not be late with anything, keep your credit inquiries down and see what the market is like in a few years. Hopefully things will get better in the market by that time allowing mortgagors to be less choosey and pickey in granting mortgages.

We're hoping that the market gets better in the next 2 years. We actually need these 2 years to finish updating our current home. We have an unfinished patio, unfinished yard...PLUS, we need the 2 years to save up our down payment.

I already have plans to clean up our reports after discharge, get a credit card to make small purchases on with timely payments...

Thanks for the advice!!

[Cali]

I don't see the market being better in 2 yrs and I agree with Flamingo getting a house will be a lot harder than it used to be.

[sick of debt]

what does everyone mean about the market? isn't good to buy when the market is low? what about a conventional mortgage is that the same requirements as an FHA?

[Flamingo]

what does everyone mean about the market? isn't good to buy when the market is low? what about a conventional mortgage is that the same requirements as an FHA?

Of course it's good to buy when the market is low but when you have a BK sitting on your credit reports, it's an entirely different situation. Right now the market is great for those that have excellent credit and have the funds to buy, or if you are an investor with the funds to purchase lower priced homes and hope to flip them eventually and make some sort of profit. FHA is the way to go with a BK because conventional mortgages (if you can get one) will usually always be a much higher percentage rate. FHA would be lower but due to your BK, you will have to pay 5 years of PMI (with, I believe, a full year of premium up front) no matter how much equity you will have in the new house or how much you put down (it's due to the BK and the higher risk). It probably will not be as easy as you think, even in a two year time frame after discharge for you. The news today indicated that housing is going to sink even lower at least for another year. Any comeback would be a gradual thing and right now homes are about 25% less than they were this time last year and there is no way the market will bounce above that 25% loss in a year's time from that.

When someone files BK, they think everything is going to be OK in a few years and they can do what they were doing previously. It just doesn't always work that way, especially with purchasing a house. BK can be a fresh start but that is to eliminate debt and get out from under - it stays with you credit wise for 10 years after filing a Chapter 7 and creditors and lenders will let you know it. You just have not yet encountered it.

Just trying to be honest and forthright. Been there, been through it and still go through issues less than two years after a Chapter 13 discharge even though we are in greart shape financially - the BK still hurts on our records and Chapter 13 filers are usually viewed more favorably in the credit market than Chapter 7 filers (actually stated to me by brokers, attorneys and bank reps). Thankfully ours will be off by April of next year.

[liveandlearn]

We are to close on a home tomorrow, 2.5 years after BK. From my recent experience loan shopping, nothing is black and white, and the previous advice is true for some lenders, not for others. I literally got opposite answers from lenders. One said only FHA, one said only conventional, we even tried portfolio, and ended up with a lender giving us a conventional at a fantastic rate and 10% down. We had 15% down, but the lender wanted a large sum in reserves for some reason, so we dropped the down payment to 10% and will make a lump sum payment on the principal after we close to put it back to the 15% we wanted to do.

Oddly enough, my strangest experience involved a lender telling me I qualified for the loan, but the PMI company wouldn't insure me. Why? I was mystified because I had actually pulled up the underwriting guidelines for the particular PMI company and knew we met every qualification with plenty of breathing room. Believe it or not, they said we didn't have enough debt!! WE had taken out small credit building loans, etc., and had a car loan that we paid off completely after a year, and had a couple credit cards. They said because we hadn't had a loan payment for a total of 24 months, we had not proved we could handle a monthly payment. Now, mind you, the loan for the house was 200% of a year's salary without commission, and 125% of a years salary with commission. That is a VERY SMALL loan for the income. Usually they'll loan you up to 4 times your yearly salary (in the old days at least). And, our debt was 5% of salary w/o comission, 3% of salary w/commission. We had $50K in the bank, a miniscule debt load, no late payments on anything, a great income, and they said we might not be able to handle a loan! I find that odd because, if anything, I think our profile showed that after BK we had learned how to handle our finances excellently!! With this lender we were going to put 15% down on a 15-year loan, BTW.

And, after all that, we got a 15-year conventional loan with only 10% down, PMI no problem, etc., and a great rate.

So, moral of the story, when you go to do a loan, CAST YOUR NET FAR AND WIDE! Don't trust your situation to just one person. We almost went with a lender who said we would HAVE to go FHA. Our rate would have been at least .5% higher. I feel very fortunate to be closing tomorrow with such excellent terms.

And, get a loan for at least 24 months, just to be safe! Do you know about loans against CD's? We had a VERY Helpful banker who recommended we take a loan out with a CD as collateral. THe great thing about the loan is that the CD earns interest during the loan, so the interest you PAY for having the loan is offset by the interest you EARN from the CD. Ended up being a 2% interest rate we paid. And, they waived the loan fees because they were a local friendly bank. That's a GREAT way to build credit at a low interest.

[sick of debt]

LIVE AND LEARN, CONGRATS TO YOU. I WILL KEEP YOUR ADVICE WHEN THE TIME COMES.


WHAT ABOUT GETTING A COSIGNER?

[Flamingo]

May I ask what "fantastic" rate you obtained with your conventional loan. In 2006, we were approved for two conventional loans and for FHA and we were not even discharged (buying out early via refinance). We got the FHA for 6.5% and the conventionals were in the 8% to below 9% range. 6.5% was the going rate for mortgages at that time.

[liveandlearn]

5.875% for 15-year term, 6.05% APR. Considering today's rates, I think it's fantastic!

[Flamingo]

5.875% for 15-year term, 6.05% APR. Considering today's rates, I think it's fantastic!

You bet it is! You are doing everything right to get that rate!!!! Keep it up!

[sick of debt]

WHAT DID YOU DO AFTER FILING? THAT IS AN AWESOME RATE.