My Chapter 7 discharged a few months ago. It is my understanding that FHA requires 2 years or 1 year with extenuating circumstances to get a mortgage. BUT what if I did not include a house in the bankruptcy (I didn't) Do those same rules apply?Do I still have to wait the 2 years? The back to work rules state 1 year with extenuating circumstances. I can't document any (tho we had some). Is there any way around that?
I'm not sure what you mean when you say you didn't include a house in BK. In my case I didn't own a home or owe debt on real estate when I filed BK7 and had to wait 2 years from discharge. I used NACA for a much better deal than FHA but had to wait the full two years from discharge either way.
You may not have surrendered your house in the BK, but I can assure you that the mortgage(s) were included. There is no way to file a BK and not include a financed house (it's all-debt, or nothing). If you had equity, you may have reaffirmed, but it's still included, you just reaffirmed.
Are you trying to re-fi or buy again? If you're trying to re-fi, do a loan modification instead... the BK doesn't matter for a mod.
Financially, NACA was a far better deal than FHA. The only money I needed at closing was for the inspections, insurance and escrows. Everything else was lender paid. I was able to use the money I would have needed for closing costs to buy down my interest rate, so I'm in for 30 years at a fixed rate below 3%. I pay $50.00 monthly for 10 years to the Neighborhood Stabilization Fund instead of nearly $300 monthly for PMI.
The application process can be frustrating because NACA is a non-profit and their first priority is helping homeowners save their homes. It took me 13 months from my first workshop to become "NACA Qualified" but I was qualified 25 months after my BK was discharged (without special circumstances you cannot be qualified before 24 months after discharge).
I wouldn't go any other way.
I am still 3 weeks away from discharge.
i saw alot of negative reviews on pissed consumer but what you have said makes sense.
So in your opinion should I go to a workshop soon or closer to the 2 year mark?
Well we close on our house November 22nd. I am 3 months post discharge. Here's how we did it:
1. Re-established credit lines with Cap One cards and an auto loan.
2. Disputed every negative entry on all three CRAs.
3. Found a LOCAL bank that held some bank owned foreclosures.
4. I had some inherited property that we were lucky enough to have as collateral.
5. Expect to pay a sub-prime rate (6%) until your credit improves enough to refi.
Now obviously not everyone has those assets but I can tell you that you are wasting your time with the big banks. If you can come up with a 10% down payment on a foreclosed property and show that you are working towards good credit, you CAN bypass all off the gubment acronyms. We did.
I would spend three to six months cleaning up your credit after discharge, and trying to open one installment and two Credit Card accounts. Then go to a NACA workshop, and do initial intake. That way you'll get your counselor's advice on what you need to do to become qualified at the earliest possible date.
You'll want to be perfect in paying your bills, and in making payment shock contributions to savings. For payment shock savings, set up a separate savings account and deposit faithfully each month, never withdraw.
Finally, remember you will have to explain any cash withdrawals or depsits of $200 or more to any of your accounts. So if possible don't (withdraw no more than $180 at ATM, use debit card with cash back, etc.) withdraw $200 or more cash, if you do get a receipt for what you used it for. Get receipts for any cash deposits of $200.00 or more.
The idea would be to be so perfect qualification will be a breeze.
I am currently employed in the home building industry and I deal with credit challenged buyer prospects every day. There is a lot of misinformation out there so please consider the source when evaluating the validity or relevance to the original question asked.
One can qualify for an FHA-insured home mortgage in as little as 12 months from discharge if
1) Bankruptcy was cause by significan event disrupting income. Must be documented.
2) Borrower has re-established credit and can sho 12 months of ontime payments
3) Current employment/income good enough to support mortgage app.
Some lenders have portfolio programs that offer similar opportunity with non-FHA, non-Fannie Mae loans. I investigated a few and downbpayment requirement was 20% and rate was 6%.