Chapter 7 Rebuild & Mortgage Refi Guidance Needed

[Anonymous]

I am 26 and Filed Chapter 7 in March of 2019 due to a Garnishment order.  I maintained Residency in Texas all my life but owned investment properties in Michigan and Indiana thru 2013-2017. Discover sued me at an old address in Michigan, never was served correctly. They got a default judgment and in March of 2019, they started garnishing wages in Texas with a Michigan garnishment order. That week I filed. Very sneaky of them, my lawyer wasn’t too impressed nor the judge, he sanctioned them during the BK. 

Discharged on 09/11/2019 Total Unsecured Liability $226,000

At the Meeting of Creditors, the trustee actually cried when I explained what all had lead to massive amount of debt. When we left my lawyer assured me this would go right thru without a hiccup. Within a few weeks, I purchased a condominium and closed before the BK was finalized. Risky I know but all the funds for the downpayment were exempt. The condo Appraised for $52k purchased for $50k with 5% down the seller agreed to do a 3-year balloon amortized over 30 years at 6.75% I self escrow and my actual mortgage is $308 month / with escrow (HOA, Taxes & Insurance)  it is $652.  

I am 6 months into this condo and I am really getting antsy over doing a refi. I love my condo so much it is absolutely perfect for a single guy like me. I couldn’t rent anything in this area for this much alone.  All the lenders I have talked to say I have to wait 4 years from the discharge to be able to qualify for a refi. Except for my credit union thru work. They do everything in house, the CEO reviews mortgages but they want 80% LTV to first even consider it and they want a good rebuild; one years worth. 

I am not sure what to next beside keep saving the money up for the additional down payment and attempt to build a really solid credit history. The CU pulls only Experian. My TU 639, EQ - does not show BK and is at 599, EX - 618. I do not want to count on just my CU to redo my mortgage. This is what I have opened since Discharge, everything but the LOC is PIF monthly. I did recently join Navy Federal as well as Pen Fed. NF offered me the secured card I am thinking of doing it, but with a decent deposit like $1,500. I want their Amex I miss mine so much. Any advice on my refi would be greatly appreciated, there isn’t a chance I could come up with the balance in the amount of time I have left before it balloons. I have ran the numbers in every way possible unless I got a huge pay raise LOL.

Line of Credit 

• Tru Grocer FCU  Originally $750 @ 18% $135 Month Opened Day of Discharge 

                                        New Limit as of 01/01/2020 $1,250 @ 18% Payment $115 

Auto Loan

• Tru Grocer FCU - $5,300 4.70%/36 months $159 Opened  12/01/2019

-Purchased a low millage 00 Z3. I negotiated very hard for the price. The Loan officer gave me a few points off the rate because she was so impressed with how much I really negotiated the deal. She said it seems if the BK taught me a hard lesson. The rate was originally 5.20%

Credit Cards

• Capital One Secured - $500 Limit  Opened 09/24/2019
• Milestone Credit Card - $300 Limit Opened 12/12/2019
• Target -   $300 Limit Opened 12/25/2019
• Credit One Bank - $300 Limit Opened 12/29/2019

Loans

• Sunbit Opened 10/11/2019 $592 35.99% $60 Month - Car Repairs on MINI 
• Sunbit Opened 01/09/2020 $495 35.99% $49 Month - Car Repairs on MINI 

BTW Sunbit only reports to Transunion and it seems like my score is better at TU with them. Just did them for rebuild help. 

Annual Income is $41,300 

Thanks for any advice in advance. 

[FireMedic1]

Basically short and sweet. Your lucky you got the condo. You have opened more than enough accounts to start a rebuild. 8 accounts and 1 mortgage is plenty for not even a year out. They all have to age and all the hits have to rebound again. Get those auto repair loans PIF ASAP. Your bleeding money on interest with those two loans. Use your cards and have 1 report a small balance like $20 and then PIF before the due date. The game is this. Have the banks pay YOU to use their cards. Not you paying the banks interest to use their cards. Emergencies only if you want to pay interest. I'll ping @ShanetheMortgageMan on how you can handle the refi thing. Good Luck and welcome to the forums.

[ShanetheMortgageMan]

Before the 4-year mark on the Ch 7 BK discharge you are going to be limited to FHA & VA mortgages as refinance options, plus the credit union you've found assuming they are still OK with the 2-year discharge when that time comes.  

When financing a condominium with FHA financing it must either already be an FHA approved condominium (which you can check at https://entp.hud.gov/idapp/html/condlook.cfm) or it must go through the FHA approval process (not all condos pass).  VA financing has a similar requirement as well, plus requires you to be active military or an eligible veteran.

If FHA nor VA look like viable options for your condo, then you'll want to stay in touch with the credit union every 2-3 months to make sure their credit requirements don't change and you are able to meet everything they require.  Sounds like they use common sense, so hopefully with 2 years of on time payments you'll meet their score requirement and will have built up some equity and saved up any necessary money in order to refinance.

[jmw1]

I agree with @FireMedic1 on this. I would simplify his advice a bit on implementing AZEO (all zero except one) for maximum mortgage scores.

Pay everything off ASAP to zero balance. Live off your job income and don't get into a situation where there is a cash flow issue and you need to use a CC.  Don't make AZEO needlessly complicated by running your expenses through those credit cards even though they are PIF and don't start circling the drain with debt habits that led to the CH7. Once everything is paid off, take one credit card each month and buy a candy bar. Let the $3 balance show on the statement. Then immediately pay it off once the statement cuts. Rinse and repeat. When you are ready to refi, the only non-mortgage debt you have is the credit card with a candy bar and your mortgage scores will always be maxed for AZEO. Don't worry about your other scores at all. Only the mortgage scores matter because you need to get this refi done.