Plan to apply for conventional mortage shortly, but it depends on...

[Lmbolling]

Hi everyone.

Been on this site for more than a few years but never posted.  In the past two years, by reading the super informative posts on this site, I've gone from FICO scores in the low 600's to now mid 700's. Thanks to all!

I would like to apply for a conventional mortage, but am not sure when I should due to a few remaining items on my credit reports.

1) I have three old collection accounst that will be dropping off of my EQ report in July.

2) i have a dismissed bankrutpcy which will be dropping off my TU and EX reports by November of this year.   I understand EQ wil keep the dismissed BK on for an additional 3 years.

My question is if I were to apply after the three baddies drop, but the dismissed bankruptcy remains - will I be at higher interest rate because the BK is still on my credit reports and still within that 7 year filing range?  I also know there is a 'checkpoint' on mortgage applications that asks if you have filed BK within the last 7 years and I'm guessing if I apply at this point, the underwriting might ask for BK filing paperwork,etc.  OR should I wait until both the baddies and the dismissed BK drop off my TU and EX reports (will be by November 2015) and then apply?  Please advise.  Again, thanks!

[Lemmus]

...afaik a chapter 7 bankruptcy filing remains on your credit report for 10years ...a chapter 13 bankruptcy remains for seven years ...I know of no difference among the CRAs in how they are reported or for how long ...thus I am confused by your statement that in your case, it is being treated differenly among the CRAs ...can you clarify?

[Lmbolling]

Hi Lemmus. It's a dismissed chapter 13. Scheduled to drop off Exp and Tu this November - because it was dismissed, it will be on Eq until 2018.

[Lemmus]

...learn something new every day here ...but EQ is not following the FCRA here, just making up its own rules in a narrow instance not clearly addressed by the FCRA

http://ficoforums.myfico.com/t5/Bankruptcy/SUCCESS-Getting-Ch13-Dismissed-BK-removed-before-10-yrs-E...

...I'd give that a shot ...if enough do it mayhaps EQ will get the message and stop unecessarily screwing over people's lives when they are not required to do so ...hth

[Anonymous]

Lmbolling is asking around -

"OR should I wait until both the baddies and the dismissed BK drop off my TU and EX reports (will be by November 2015) and then apply? "

That's what I'd do. In the meantime stay away from house shopping, cause you're subject to find a house you really like and pull the trigger costing ya extra money might otherwise not had to pay.

[Lmbolling]

Thank you! Will stay off the real estate websites until the end of the year. :-)

[Anonymous]

It's not that the BK itself affects your interest rate, but rather the BK affects your credit score, which affects your rate.

If you're already in the mid 700's, you can't get much better. House prices and rates are likely to be higher in six months than they are now, but the decision is ultimately up to you. Best of luck!

[Lmbolling]

Thanks.  That's what's making me nervous - the potential interest rate rise!  Something in me is telling me to take the plunge once the baddies drop next month (which should result in a further score increase)... all the while interest rates remain low.  However, having a less than 7 year old dismissed BK leads me to believe that there will be tons more paperwork involved and letters of explanation.  Thanks for all the comments - I'll figure this out soon. :-)

[frugalQ]

yeah, if you are already in mid-700's, it's worth a shot.  are the collections paid?  If they are not, you may be required to pay them for a conventional loan...not sure.  also, i'm not sure how fannie mae treats dismissed BK's vs a discharged BK.  You should read up on the fannie mae selling guide to get the requirements.

if your collections are set to fall off in july, have you tried getting them to be removed early?  it's worth a shot.

good luck

[Lmbolling]

The collections are unpaid and went into default 2007.  They were included in BK, but were then 'released' as the BK was dismissed.   TU removed the accounts about a month ago, Exp said on the phone that I have to wait until June 1st for removal, Equifax ended up making the request to remove early into a dispute. Not too concerned though as the accounts will be off within the next two months because of the DOFD.

What I've read is that a conventional mortgage is obtainable if the BK dismissal occured four or more years ago.  Mine occured in April 2011... so I hit the 4 year mark last month.  I guess I'm also concerned that merely having the BK on my report will cause it to be scrutinized a bit more causing me the headache of getting filing docs/letters of explanation for BK accounts, etc. etc.