Hello Mortgage savy MyFICO'ers!
I am so very excited to finally be at a place in my life where I am able to buy my first home. I have worked diligently to work on my finances and my credit and as the time draws near I would like to know when I can begin. I had a BK7 2 years ago and as I understand I must wait two years from the date of discharge in order to be eligable for a mortgage. However, in reading these forums and other sources of reading I have come to understand that this home buying process takes a bit of time, and that I do not have to wait until the 2 year mark to start. I guess that is because you dont lock in your rates until later and you must search for a house and all other things. So my question is - when can I begin to look and speak to a mortgage broker? Or realitor? Im not sure where to start and when.
EDIT: Forgot to mention I am in Virginia and this will be my primary residence.
My 2 year filing date just was reached this month and my Ch7 discharge 2 year mark will be in the first week of May. Should I wait till April? March? Start looking now?
Some data points for your consideration:
My taxable work income is $60k and im at 100% TAP VA Disability rating which is $3757 monthly or just over $45k annual not taxed income
My only debt is my truck payment with is $350 monthly, I owe no student loans and no other debt besides basic stuff like cell phone, etc
I live full time in an RV which I own outright. I dont know if my monthly "rent" for staying at the campground is included in a DTI so I'll just include it - $600/monthly
My credit card total credit limit is $20600 and I practice AZEO where my current UTL is %11%
According to MyFICO my current mortgage scores are:
EQ: 671
TU: 684
EX: 678
Thank you all for any feedback / guidance you can provide!
@VAMortgageGuy wrote:Hi @rosco75,
Based on the stats you provided, you should have no problem getting approved for a VA mortgage.
The good news is you'll be exempt from property taxes in VA.
As far as when to get started, well that's a little tricky. Here's why.
In order to get pre-approved for a VA mortgage, a lender will run your "file" through an Automated Underwriting System (AUS).
Generally, a file with a chapter 7 BK that has not been discharged for 2 years and 1 month, will receive a Refer/Eligible decision from the AUS. The main reason is due to how BKs are reported to the credit bureaus. The discharge date is reported as the month and year but not the day so the AUS has no idea if your BK was discharged on 5/1 or 5/31. The only way to "ensure" you meet the 2 year post discharge requirement (from the AUS perspective) is to push it to the following month. Does that make sense? I have had a couple of files where I actually received AUS approval prior to the 2 year mark but that's very rare.
With all of that said, I have issued clients a pre-approval letter prior to the discharge date with the understanding that they cannot close until after the 2 year mark. That allows you to get out and start looking when you're ready.
The $600 per month RV lot rent will not be counted in your debt to income ratios.
Thank you so very much for that insightful feedback! I did not know about the exemption from property tax here in Virginia but when I looked it up it seems that I am indeed exempt - not just from property tax on a motgage but from my personal property tax too! Very cool Virginia!
I am not really sure how that effects a motrage though - since taxes are generally rolled into the entirety of the loan (from what I understand) does that mean my purchase price / loan amount will be lower? Or does this only effect my monthly payments?
Wow I had not thought about the timeline for discharge consideration for day of month. The 2 year 1 month thing makes perfect sense when explained in that way. Is it safe to assume that if I find a willing lender that I could get such a pre approval letter? I amagine that if a seller was willing to wait, or if I wanted to time it where I could make the closing date as close to that mark as possible that it would be better to start looking soon. I am just super anxious to get out of this RV and into a home. And I am sure that my kid would be happy with a more stable internet connection for his playstation than a hotspot lol 
Also - when we here talk about pre approvals, I often cannot find wether that means a soft pull or hard pull. I always feel like the hard pulls come later when getting closer to locking in your rate but I have read on these forums stories of multiple HP's along the home buying journey. Are there any factors that effect this? Such as type of loan or specific lenders?
@iced wrote:
@rosco75 wrote:Also - when we here talk about pre approvals, I often cannot find wether that means a soft pull or hard pull. I always feel like the hard pulls come later when getting closer to locking in your rate but I have read on these forums stories of multiple HP's along the home buying journey. Are there any factors that effect this? Such as type of loan or specific lenders?
My pre-approvals were all hard pulls, and were good for 6 months each. I've had HP will multiple banks, though all were conventional (both jumbo and conforming).
Thank you for the data point. Typically when you finance something thats not a home, the hard pull usually is only valid for a few weeks or a month so I am glad that it seems to be different with mortages, although im sure they do not want you to go crazy and do anything like buy stuff I was just worried about the window of opportunity allowed to shop around or complete things. Thanks!!
@rosco75 wrote:
The 2 year 1 month thing makes perfect sense when explained in that way. Is it safe to assume that if I find a willing lender that I could get such a pre approval letter? I amagine that if a seller was willing to wait, or if I wanted to time it where I could make the closing date as close to that mark as possible that it would be better to start looking soon. I am just super anxious to get out of this RV and into a home. And I am sure that my kid would be happy with a more stable internet connection for his playstation than a hotspot lol
I used my VA loan in 2021 to purchase my home and had no trouble getting a pre-approval letter that made the purchase process easier. One factor that has not been mentioned is the housing market. I would not be counting on a seller being "willing to wait" for you to pass a subjective date and get approval. Depending on where you are and how competitive the market is sellers can still have multiple offers on a good solid home and your offer would quickly be declined when up against other offers that don't want them to wait for you to get approval. I am in Las Vegas and in 2021 the market was SO competitive that had I not gone under contract when I did within a week I would have been pushed out of the market due to the selling prices going ridiculously high. One thing that got 3 of my offers rejected was my VA loan. Some sellers are really loathe to work with them. You are in a high military profile state so it may not be as much of an issue there. Also my being in Las Vegas was an issue because many sellers were waiting for the out of state buyers with cash who would willingly pay way over asking prices. That has slowed dramatically as well in the past 6 months.
Point is get a good real estate agent who is familiar with the market you are shopping in. Had I not had a great one I would not have the home I own today.
