Finding a mortgage lender after bankruptcy?
Hi Everyone, my husband and I went through a ch 7 bankruptcy that has been discharged for a year now. We'd like to buy a home in the next 6-9 months and I am currently trying to educate myself on how to do it. We've been working hard to raise our score and have been succesful at it.
So, my questions are: 1) Are there any mortage lenders that won't just run away screaming when they hear we have a bankruptcy? Better yet, a lender that we won't pay out the nose with in re interest rates?
2) What are the additional costs of buying a house? What exactly are closing costs; What other costs are there?
Any input would be great!
- Anonymous1 decade agoBest Answer
Go to http://www.daveramsey.com and on the right hand side is a link for ChurchHill Mortgage company. They have lenders that have home loans that are really even based on your credit score. Have a good stable job for 2 or more years and pay your rent on time for 2 or more years? You can get a home loan from things just like that. Doesn't matter what your credit score is.
- 1 decade ago
Lots of lenders will work with you one day out of bankruptcy, provided that your down payment and credit score fit the same profile as everyone else. The vast majority are subprime lenders, so there will be a prepayment penalty on the loan, but it can be done.
You'll be almost two years out by the time you apply. The thing about bankruptcy that absolutely disqualifies most folks from A paper is the fact that they've usually got a lot of 30 day (or more) late payments. If you don't have more than one or two late payments, you may qualify A paper.
The final thing that disqualifies most people is that lenders want to see post bankruptcy credit history. Specifically, on-time payments. One hopes you kept a couple of credit lines out of the bankruptcy. If not, go get a revolving line of credit. You may have to have a secured credit card to start. Once per month, charge something small that you would otherwise have paid cash for, and pay the bill in full as soon as you get it. The reason credit cards work best is that you can charge just about anything on them, so you don't have to make special purchases. Once you've done this for a few months, you should be able to get a regular credit card (preferably with the same provider changing the same account to unsecured, so your time with that line of credit keeps growing). Keep doing the same thing.
DON'T go applying everywhere. Be very upfront about your situation, and do not apply unless someone with some serious experience with their credit department can offer you some good assurances about your prospects of being approved. After a bankruptcy, each inquiry hurts your credit a lot worse than in other circumstances. I've had good experiences sending my clients to credit unions.Source(s): Loan officer and Realtor in San Diego. Website http://www.danmelson.com
- 1 decade ago
You can definitely get a loan, but because of the recency of the bankruptcy you will find the interest rate you get will be higher. Also, if you are purchasing a home before 2 years has passed since the date of discharge on your bankruptcy, you'll need to have anywhere between 10-20% down. Usually the 2 year mark is the magic number where you can get loans with 0 down and a little better rates.
When you purchase a house, you'll need to prepay 1 years worth of homeowners insurance and a portion of your property taxes. The total amount of closing fees will depend on where you live, the loan amount, and if you are being charged points. When you go to get a mortgage, a lender will supply you with what's called a Good Faith Estimate (GFE). The GFE gives you a breakdown of the fees and what they are going to. Some typical fees are for appraisal, processing, title insurance, flood cert., and tax stamps.
- 4 years ago
I will be out of my chapter 13 this July, and have reestablished my credit with a car loan and a couple of credit cards.
I paid the 1400.00 a month to the bankruptcy courts for 4 years and have NEVER be late on a payment, and the current car loan and credit cards. My ratio of income versus out go are minimum,
Could I qualify for a mortgage? I don't really want to pay the high interest rates.
What do you think?
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- 1 decade ago
Absolutely, you can purchase a home after backruptcy. There are a lot of factors that go into determining an interest rate such as credit score, debt to income ratio, LTV,etc. You can ask your R.E Agent to negotiate that the Seller contribute toward your closing costs (up to 6% with some lenders) thus little or no money out of your pocket.Source(s): I'm a nationwide Loan Officer http://sbigley.primelending.com
- The ManLv 51 decade ago
There are numerous companies that specialize in bad credit mortgages. So finding one will be easy.... However, they will charge you really high interest. Closing costs are the fees involved... i.e. inspections, loan fees, title fees, etc.
I'd advise meeting with a good loan officer and you'll get an estimate of what house you'll qualify for and how much you'd have to pay in closing costs
- 1 decade ago
Lender will give you money for sure. Probably charge you a higher interests rate and extra insurance on the loan for not having the down payment or good credit.
Would you consider delaying your plan? As housing market continues to slump, it might save you 10% simply by waiting for a few months. Another way to look at it, you can increase profit by 10% when you are ready to sell it.
As housing market continues to slump, if you don't plan to delay your plan, please interview several and pick a good realtor or agent.
Bad ones will talk you into buying the largest property at your credit limit. Good ones will find you a good deal (Sellers are offering discount and incentives now).
Try to stay away from Adjustable Mortgage, because 30 year fix mortgage rate is very low right now. There is no reason to use Adjustable loans except fatter commission for loan agents.
Interests only loans are not good iether. Mortgage payment consists of two parts: interests and principal. Interests are like rent, which doesn't add to the equity to your house. It simply disappear as your pay it. If you want to use interests only loans, might as well rent, especially during market downturn, because housing price won't appreciate.
Finally, for tax benefits, talk to your CPA or tax accountant. Do not consult finance with realtors or agents. They get commissions when you sign the check!
Good article when you want to put in bid, negotiation.
It is a myth that renting is always worst off than buying.
Rent vs. Buy as Housing Market Continues to Slump
As housing market slump, it is easier to calculate "Rent vs. Buy" scenario. Because "appreciation" is no longer a factor.
Mortgage payment consists of two parts: interests and principal. Interests are like rent, which doesn't add to the equity to your house. It simply disappear as your pay it.
If interests portion of the mortgage payment is roughly equal to rent of equivalent property, then it is a decent buy.
For example, let's buy a $500,000 condo with 0% down and apply interests only loan (just like renting a place). Mortgage payment would be $3250/month. It is a bad buy, because you can enjoy same property for $2000/month.
Please note that I assume the tax benefits from home cancel out fees from home association and property tax. For more accurate calculation, consult with your CPA or accountant. But NOT your realtor, whom will say anything to get the deal to go through.
And again, if you like a particular property, then paying more may be reasonable. You are the only person who can decide how much more premium you are willing to pay.
- 1 decade ago
1.) Loan after BK-7? Definite YES.
2.) Getting qualified with an 18-mo. old BK7 record:
a.) Copy of your BK papers - all schedules with discharge;
b.) Re-open a secured (VISA/M.C.) card w/ min. of $2,000.00
Let season for 12-24 months of timely payments.
c.) If Wage earners (husband and wife)
c.1.> 2-Yrs. Federal tax returns
c.2> 2-Yrs W-2s
c.3> 1-month current paystubs
d.) If Self-employed or w/ unverifiable income/employment:
d.1.> 2-years business license;
d.2.> CPA/Tax Preparer's Certification Letter
d.3.> FBN Statement, if applicable
d.4.> Professional License (if applicable)
d.5.> 2-Yrs. Fed. Tx Returns & 1099s if applicable
d.6.> Additional docs may be required for SEs
e.) If renting, provide 12-month cancelled rent checks
(front and back copies) and landlord's contact info;
f.) Liquid Assets:
f.1.> Cashier's Check for Deposit to escrow
f.2.> 3 to 24-Months Bank Statements on each account
(12 to 24 Mo. Bank Stmts may be Alt to Fed Tax Rtns)
f.3.> Balance on Bank Accounts must
1.) Have 3-6 months cash reserves for PITI; plus
2.) Enough Money for Deposit to Escrow; plus
3.) Up to 3% cash reserves for closing costs
(max estimate only, not actual figure)
f.4.> Declared Life Insurance <cash value> and retirement
funds and Stocks, etc. must be documented well.
G.) Explanation Letter of BK-7 Filing.
H.) Additional info may be required.
3.) Additional Costs to be expected:
a.) Trimerge Credit Report - with OFAC Fraud Alert Clearance
b.) Credit Report Supplements (if applicable)
c.) Full Factual Credit Report (if required) - most expensive
d.) Appraisal Report (also anticipate 442s, IF applicable only)
e.) Inspection Reports (agent negotiates with seller)
f.) Termite/Pest Clearance Report (agent negotiates)
g.) H.O.A. (if applicable) Certification/Warrantly Letter
h.) Mortgage Closing Costs
1.) Broker Fees (request for Good Faith Estimate)
2.) Lender Fees (Good Faith Estimate is autom. sent)
3.) Escrow & Title Fees
4.) Title Insurance, Endorsements
5.) Escrow Miscellaneous Fees
6.) County Recording Fees
i.) Pre-paid Items
1.) New Lender's pro-rated interest per loan (30 day standard)
2.) Hazard Insurance 1st annual premium
3.) Property Tax (confirm w/ escrow or broker)
4.) Hazard Insurance up to 3-mo. reserves (impounded)
5.) Property Tax, up to 3-mo. reserves (impounded)
6.) H.O.A. Dues (if applicable)
Verify and confirm with your locally-preferred real estate and mortgage professional(s). All the above items are "over-kill" items, only so you can anticipate what will be requested, without any surprises.
Request for a 100% Financing, or an 80/20 Split loan from your loan officer. I can not provide anymore info other than check with your broker/lender, based on your lender's state lending guidelines.
I hope this helps. Good luck!!!Source(s): mortgageservicescenter.org
- 1 decade ago
Hello and Congratulations on taking the initiative to buying a new home.
There are many lenders that work with Chapter 7 & 13 one day out of discharge.
Novastar, HSBC, Delta Funding and numerous other lenders would enjoy the chance to earn your business. May I share with you a link which takes you to a Free report about 10 Critical Mistakes People Make When Applying for a Mortgage?
Then Here is the answer to your second question about closing and or other costs.
9 Hidden Costs Most Buyers Completely Miss.
Get ready to learn about the miscellaneous expenditures you'll encounter during the home buying process. This report will uncover the 9 most overlooked costs home buyers miss.
Sit back, relax and get ready to become informed!
1.) Taxes, Taxes, TaxesThink April 15th is the only day of the year you need to worry about taxes? Wrong. Taxes are an integral part of homeownership. Property taxes from the state, county and local tax authorities will be assessed from you as a homeowner. Most lenders will create what is called an "escrow" account. This account will have money added to it each month that is taken from your monthly mortgage payment. This money is then used by the lender to pay your property taxes and other items, like insurance on a schedule. Make sure you ask the lender what your PITI will be, not just your mortgage dues. This total monthly payment (PITI) figures in your mortgage payment and tax and insurance fees. Land transfer taxes are also a consideration. In some cases, this tax is assesses when property changes hands.
2.) Appraisal FeesYour mortgage lender will most likely request that an appraisal be performed on the home you are purchasing before they agree to lend you the money. The reason - the lender must make certain that the property is actually worth what the seller is claiming. This protects the lender, keeping them from lending money that is not secured by real property. Appraisals vary in price and can range from $150-$450.
3.) Misc. Origination and Loan Fees
When a mortgage company approves your loan, they are just getting started. The process of finalizing your loan requires a number of intricate steps, including processing / document preparation, underwriting, closing and funding. Because of this, lenders often charge additional fees. Be prepared to pay processing and closing fees, in addition to origination fees and document preparation fees. Of course fees can vary from lender to lender and it pays to shop around.TIP- Reputable lenders will guarantee their prices. We offer a "Lowest Bottom-Line Cost Guarantee". For more details, click here.
4.) Association and Maintenance FeesDoes the neighborhood you're moving into have a neighborhood association? If it does, you need to watch out for association dues. Some upscale neighborhoods will actually require that you join the association, so these costs need to be factored in ahead of time.If you are purchasing a condominium, beware of maintenance fees, which help pay for groundskeeping, carpet cleaning and periodic renovation.
5.) Survey FeesLenders sometimes will request an updated property survey before they will agree to close and fund your loan. Survey fees can vary from $600-$1000.
6.) Utility Service Fees
Moving into a new home will require that you set up utility service in many cases. Cable, phone, electricity, gas and water companies will require an installation fee or "hook-up" fee to get you started. Be ready to pay fees ranging from $10-$50 for each one of these utilities...
7.) Mortgage Insurance and Homeowners Insurance
Don't get mortgage insurance and homeowners insurance mixed up, as they are very different. Mortgage insurance is required in cases where the down payment is smaller than the lender's requirement. In these cases, you will pay between 0.5% and 4% extra to "insure" the mortgage. These fees are usually rolled into the PITI (total monthly payment). TIP - After you have paid down your mortgage loan a bit, the equity in your new home will increase. When the equity hits a certain percentage, in many cases, the mortgage insurance is no longer required and can be removed from your monthly payment. Ask your lender for details.
8.) Moving Costs
Unless you decide to "do-it-yourself", you will be forced to hire a professional mover. Movers can charge anywhere from $50-$100 per hour, so it pays to shop around. Because of the many unscrupulous moving companies in business today, we highly recommend you do the following before hiring a mover
:- Call the local Better Business Bureau and ask for a report on the moving company you have picked
- Call the state's Attorney General's office and ask if any reports
were filed against the company in question
9.) Water Quality Certification
If you purchased a home that draws its water from a well, we advise that you have the water tested and certified. Chemicals and bacteria can seep into a well over time. So be safe and have the well tested. Fees for well certification can vary by location.
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