Mortgage after ch. 7 bankruptcy question

[Anonymous]

I have a year left of the two year waiting period to apply for a FHA loan. My question is...would this be only loan I could qualify for? I'm hearing that it's a bit hard to get FHA offers accepted but maybe the market won't be so hot next year. Just trying to prepare myself. I've been saving extra and have gotten my scores to the 680 range.

[ShanetheMortgageMan]

With conventional loans, Fannie Mae & Freddie Mac need a 4-year waiting period after a Ch 7 BK (2 years if due to extenuating circumtances) but there are other non-Fannie/Freddie conventional loans that allow less of a waiting period.  Those programs are called Non-QM (Qualified Mortgage, more info on what that term means can be found here) and serve a similar purpose as sub-prime loans did, but are much more consumer friendly than sub-prime loans were (no more prepay penalties, 30-year fixed loans are usually the norm).  Non-QM mortgages usually require more of a down payment, so someone can get a Non-QM mortgage at the 1-year discharge mark of a Ch 7 BK but for example 25-30% down might be the requirement and at 2 years discharge it would be 20-25% down, etc.  There are a lot of different Non-QM lenders out there, for the most part their guidelines are similar but they'll have slight differences regarding credit score, down payment requirement, etc.  

[GunsCarsPlanes]

I think purchasing in 2021 is insane, we are literally at the height of the bubble and if it doesn't start to pop this year every forecast is expecting it to pop sometime in 2022.

Look at the values on Zillow, every house has increased 100% or more in price within the last 9 years, that is fundementally wrong.  Wait until banks are allowed to kick people out of their house for not paying the mortgate for the last year because they lost their job, all the landlords with 2 or 3 houses that they haven't paid for because they haven't collected rent for a year because no one has jobs.  Banks are going to be collecting SO MANY houses from people.

A 110,000.00 house from 9 years ago should sell for 150,000.00 give or take, not 245,000.00.  Trust me, you don't want to be in a house and 13 years down the road after the bubble pops and your still negative equity.  You can always refinance and work with the loan and interest, once you pay that price for the house thats set in stone forever.

[Anonymous]

I won't be two years post discharge until March 2022. I have seen prices going up a lot in my area as well and I live in a smaller town. I'm just trying to save and figure out what kinda loan I would be eligible for. I do find it weird how prices are going up so much with jobs hard to find and we haven't returned to normalcy yet.

[GunsCarsPlanes]

Bob doesn't have a job and unemployment ran out and he hasn't paid rent in a year.  Doesn't matter it's against the law to kick him out.

Sarah is collecting rent for her tenants for her 2nd and 3rd house, she can't pay those mortgates.  Doesn't matter, can't foerclose on her.

Harry in his 1 and only house doesn't work and can't pay, doesn't matter can't foreclose.

This has been building and building and the sooner we get back to normal as everyone keeps mentioning the sooner those restrictions are going to be lifted.  I honestly feel this point in time is 12 months give or take from when the last housing bubble popped.  There will be an abundance of houses to choose from, there won't be 10 people bidding on 1 house paying way over market.  Prices will indeed come down.

Alot of people don't think it's true and alot of people won't care if it is true, they simply want a house now and their lack of impulse control will make them buy a house now which is fine and I could care less but I'm not going to be sitting in a house I paid $300,000.00 for and in 10 ten years paying a mortgate that's above my means have something that dipped down to $200,000.00 and after 7 years crept back back up to $240,000.00.  If you buy at the right time and heaven forbid something happens then you should be able to say "I paid my mortgate on time for 7 years and while it's not much, even though I'm going to lose my house I can at least come out with $30,000.00 in equity to restart my life".  Not end up losing the house and still being on the hook for $30,000.00.

Look at 99% of all real estate market forecast for 2021 & 2022 and see for yourself.  I'm not just making this up out of wishful thinking.

[sccredit]

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@GunsCarsPlanes wrote:

Bob doesn't have a job and unemployment ran out and he hasn't paid rent in a year.  Doesn't matter it's against the law to kick him out.

Sarah is collecting rent for her tenants for her 2nd and 3rd house, she can't pay those mortgates.  Doesn't matter, can't foerclose on her.

Harry in his 1 and only house doesn't work and can't pay, doesn't matter can't foreclose.

This has been building and building and the sooner we get back to normal as everyone keeps mentioning the sooner those restrictions are going to be lifted.  I honestly feel this point in time is 12 months give or take from when the last housing bubble popped.  There will be an abundance of houses to choose from, there won't be 10 people bidding on 1 house paying way over market.  Prices will indeed come down.

Alot of people don't think it's true and alot of people won't care if it is true, they simply want a house now and their lack of impulse control will make them buy a house now which is fine and I could care less but I'm not going to be sitting in a house I paid $300,000.00 for and in 10 ten years paying a mortgate that's above my means have something that dipped down to $200,000.00 and after 7 years crept back back up to $240,000.00.  If you buy at the right time and heaven forbid something happens then you should be able to say "I paid my mortgate on time for 7 years and while it's not much, even though I'm going to lose my house I can at least come out with $30,000.00 in equity to restart my life".  Not end up losing the house and still being on the hook for $30,000.00.

Look at 99% of all real estate market forecast for 2021 & 2022 and see for yourself.  I'm not just making this up out of wishful thinking.

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Personally, I agree. However if you look at all of the market predictions so many "experts" are predicting continued price increases albeit at a lower level than the past 12 months. I HOPE that isn't the case because I just can't see buying a house next year at current prices. At a certain point you price first time homebuyers out of the market and that in itself slows sales down and brings prices back down. . The FED's cheap money policies have extended the housing run much further than it should be.  

[GunsCarsPlanes]

I noticed your signature and I am in somewhat of a similar posistion.

Bankruptcy August 2016 and I'm looking to get into a house towards the end of 2022.  I don't know how the market will re-adjust itself and in which form that will take but I do beleive SOMETHING is coming.  Maybe it won't be drastic, maybe it'll be a gradual thing but there is no way people making 60,000.00 a year can afford a normal sized 350,000.00 house.... even more the closer to major metropoltian areas.

I know some of what I want is my own wishful thinking but if I take myself out of the situation I still can confidently say I beleive a correction is coming.  Now will that correction move be in play by the time I'm shopping, that is where I am totally unsure like 50/50.  The only saving grace on my end is I don't HAVE to purchase a house, I have a wonderful and very nice landlord and I am able to extend my rent agreement and continue to save at a pretty good clip.  If things aren't looking good in our favor by fall time of 2022 then I think I may need another 6 - 12 months.

I just want to do things the right way and I feel like the choice will be obvious when it's obvious.

[sccredit]

Same position here. Our landlord is very chill. If I need more time we'll just continue on where we are. 

[GunsCarsPlanes]

All I know is what I've read (quite a bit through the past few years), a while back I found a great article which listed the types of loans and the waiting period for each but there's no way I could find it now.  On that note, I found another website which has similar information:

https://www.incharge.org/bankruptcy/how-soon-can-i-get-a-mortgage-after-bankruptcy/

All in all it looks like you & I will still qualify for ANY type of loan we would normally go after without bankruptcy on our credit but some of those more specific type loans have some minor waiting periods, heck some will let you apply a week after yoour bankruptcy discharge date!  Oh, for what it's worth, anytime I have applied for something and bankruptcy caused them to say no (twice....once with custom insurance and once with regular insurance) I asked if I could explain the bankruptcy, why it happened and how my life has changed and in both cases after reviewing my letter I was approved for those denied applications.  You'd never think in this day & age of corporate black and white where you're denied for the smallest thing that a personal letter would have any impact whatsoever like the good ol' days but it really indeed does work.

Bankruptcy has only posistively impacted my life and all of the negative associations are nothing more than someones isolated story just repeated by an endless chain of people.  It also makes a huge difference if you do the right thing and you have tangabile proof where you can "here, look at everything from this point in time and you'll see I am better off than 85% of people who have never filed for bankruptcy".

It seems like banks are quite aware that someone who has filed for bankruptcy could have a chance of being a lower risk than someone who hasn't (obviously in isolated cases on both sides of that statement).

You'll get whichever loan with a near 700 score, I'm just waiting for property prices to correct themselves.  I purchased a condo at 22 and I had negative equity up until the day I walked away (14 years later) and it was really tough.  You can't ever re-finance because no bank wants to take on a peice of property that is worth less than the amount of cash you're financing.  I thought "I'll over pay for the condo and just re-finance later to save cash" but that never worked out, I was just left with a property that wasn't worth what I paid for it and a mortgate interest rate that was higher than everyone elses and when I tried to lower it I would just get denied like instantly.

[House2021]

GunsCarsPlanes can you please send me a direct message with the mortgage broker/bank you went through? I haven't found a lender even willing to try for someone two years outside bankruptcy with extenuating circumstances for a conventional loan.