Quickie FHA question...

Anonymous · ‎02-18-2009

Searched around but couldn't find this anywhere...

For FHA with a BK, 2 years from discharge, got it.

Now, is that apply for date 2 yrs after discharge, or closing date at least 2 yrs after?

My discharge was June 07. Right now, from what I have been told, avg FHA loan takes 4-6 wks to close.

This would leave a small time frame to apply, buy, close, and move all during summer break for the kids. Would much rather they started the new school year at the new home.

Apparently, a flood and losing almost everything you own doesn't qualify for "extenuating circumstances" if you then struggle for 2yrs to try and get straight before you give in and file a BK. Should have did it right away I guess.

Be great if I could get pre-approved and buy in May and close in June. Possible???

Thanks in advance

Anonymous · ‎02-18-2009

As much as it sucks for that circumstance, the reason that it is not an extenuating circumstance would be a simple word. Insurance. If you live in an area with any flooding, flood insurance should be purchased. I have the same issue living in CA with earthquakes. My earthquake policy costs as much as my normal house policy does. That said, I was not picking a fight, just explaining why they do not consider that extenuating. Extenuating usually is death in the family/serious illness casuing job loss, etc.

Anyway, you should be able to apply prior without closing until after the 2 year mark, but you may have other problems

Just getting past the 2 year mark (and there are rumors that the 2 year mark is going to change upwards to 3-4 years) is not the only thing. you have to have developed some good solid credit (3 tradelines) post BK with absolutely zero lates. Also, I would expect the underwriter to want to see some reserves and decent down payment money as well as reasonable DTI levels.

SO, what I am saying is that once past the 2 year timeframe, the BK does not disapear. It will still have a strong influence on the overall picture in underwriting and you will need a strong file to get approval (especially the zero lates post BK on your credit...that is a deal killer almost every time.)

Message Edited by mickie08 on 02-18-2009 07:09 PM

Anonymous · ‎02-18-2009

Just getting past the 2 year mark (and there are rumors that the 2 year mark is going to change upwards to 3-4 years)

any more on that? where the rumors are coming from?

this is the first I've heard

Anonymous · ‎02-18-2009

I have just heard that being tossed around. Fannie and Freddie already have longer guidelines as well as conventional loans. With all the foreclosures, there has been talk to extending the guidelines to make it seem less enticeing to people who bought in the bubble and are considering walking away.

Anonymous · ‎02-18-2009

Thanks for the quick response, that is what I was looking for.

As far as everything else, it was a freak thing as Hurricane Ivan came through PA, yes I said PA. I had no reason to have flood insurance, well at least I thought I had no reason. A small creek in my backyard 100 feet back and 6 feet lower had never flooded its banks in recorded history. 6+ feet in my house later... Oh well, live and learn right.

Anyway, I think I should be ok as my application is "suspended" and not denied. I was told the only hang up is the time frame from the BK and everything else is ok. Does that sound right?

Last check, I have come up from 580s to 644 avg. Got 2 CC that I put gas on and pay off every month about 7 months old now. Car Ins, cell phones etc on time monthly for last 2+ yrs. About 5k in savings right now with about 1k a month going in. (So looking at around 8-9k by June)

50k a yr w/ only the 2 CC payments in my name. So, I hope I am right looking around 110-120k.

If we need more, the wife makes 50k+, but both current vehicle payments and the lost house were in her name, which I think will bring in more problems while only gaining a few bucks on DTI.

Again, thanks and I guess I will just keep plugging away and maybe start trying to get pre-approved in May.

Message Edited by AlmostAtHome on 02-18-2009 10:12 PM

Anonymous · ‎02-19-2009

Check and see if PA is a community Property state. If it is you would have to count both husband's and wife's debts anyways.

That said, you probably will need those cc accounts to age to a year before they will really count. They want 12 months on time payments to count as a good tradeline.

Anonymous · ‎02-19-2009

I've looked and everything I see says PA is not. Good news I guess.

Not to drag this out, but I was under the impression that it was incur no new debt, or perfect credit in the 2 yrs after BK.

Was it a bad thing to get those cards?

Is that going to delay me until August now (when those cards reach 12 months)?

Or will they just not count and niether help or hurt me?

Seems the more you get into this and the more info you get, the more confusing it becomes, lol.

Anonymous · ‎02-22-2009

@Anonymous wrote:

Not to drag this out, but I was under the impression that it was incur no new debt, or perfect credit in the 2 yrs after BK.

Was it a bad thing to get those cards?

No, it's great to have some positive trade lines reporting. They're helping you rebuild your credit. Just make sure they are that - no late payments, etc. Keep paying them off fully every month. Now that you're house-hunting though, you probably don't want to be opening anything more until you've closed on the house.

Anonymous · ‎02-22-2009

Post BK credit needs to be perfect.

new credit is fine, but for it to count as one of your 3 required credit tradelines they need to be open for 12 months. They don't consider a credit line that is less than 12 months old a positive or negative tradeline, just a new one without enough history to count it. IT will still count towards DTI and such and may sway favor for you in UW if they are looking at the payment history of those accounts and are on the border between approval and denial....But, it is not one of the normally 3 required tradelines.