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VA loan after Chapter 7 on current VA loan?

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VA loan after Chapter 7 on current VA loan?

I purchase a home using a VA loan in 07/2017. I went through a divorce and a subsiquent Chapter 7 bankruptcy that was discharged 05/2018. I did not reaffirm the home, but continue to make payments and currently live in it. I have drastically increased my income (went from GS-5 to GS-11 and am recieving 100% VA disability). I would like to purchase a new home in the next few years. My questions are:

 

1. Will a VA lender touch me again? I've read two years and my current fico scores are high 600s low 700s

2. Should I continue making payments on the home when it comes time to buy? I have minimum equity in it, if any, after realtor fees

3. Are there any other general tips and recommendations while preparing to buy a new home?

 

Thanks!



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Super Contributor

Re: VA loan after Chapter 7 on current VA loan?


@09ROPSI wrote:

I purchase a home using a VA loan in 07/2017. I went through a divorce and a subsiquent Chapter 7 bankruptcy that was discharged 05/2018. I did not reaffirm the home, but continue to make payments and currently live in it. I have drastically increased my income (went from GS-5 to GS-11 and am recieving 100% VA disability). I would like to purchase a new home in the next few years. My questions are:

 

1. Will a VA lender touch me again? I've read two years and my current fico scores are high 600s low 700s

2. Should I continue making payments on the home when it comes time to buy? I have minimum equity in it, if any, after realtor fees

3. Are there any other general tips and recommendations while preparing to buy a new home?

 

Thanks!


First, yes, you should continue making payments unless you want your home foreclosed on. 

 

Second, (from Google) If a vet has repaid a VA loan and sold the home he purchased with it, he may reuse his benefit to buy another home. There’s no limit to the number of times the benefit can be used this way. However, a vet is allowed only one chance to borrow for the purchase of a home while he still owns one purchased with a VA loan. A vet who has used only a portion of his full benefit may use the remaining benefit for another loan, although this arrangement might require a down payment.

 

Third, (from Google) people who filed bankruptcy can still avail of VA loans depending on the kind of bankruptcy filed. If the bankruptcy was filed under Chapter 7, the applicant shall have to wait for at least 2 years before he can apply for a VA mortgage loan. Bankruptcy under Chapter 7 allows the defendant to liquidate his assets and discharge his debts. 

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Valued Contributor

Re: VA loan after Chapter 7 on current VA loan?


@09ROPSI wrote:

I purchase a home using a VA loan in 07/2017. I went through a divorce and a subsiquent Chapter 7 bankruptcy that was discharged 05/2018. I did not reaffirm the home, but continue to make payments and currently live in it. I have drastically increased my income (went from GS-5 to GS-11 and am recieving 100% VA disability). I would like to purchase a new home in the next few years. My questions are:

 

1. Will a VA lender touch me again? I've read two years and my current fico scores are high 600s low 700s

2. Should I continue making payments on the home when it comes time to buy? I have minimum equity in it, if any, after realtor fees

3. Are there any other general tips and recommendations while preparing to buy a new home?

 

Thanks!


Hi 09ROPSI,

 

Yes you'll be eligible for another VA loan once you hit 2 years post discharge.

As far as your current home goes this where things get complicated.

1) The amount that you can borrower without putting money down is based on the amount of VA entitlement you have available. If you let your current house go, you'll end up with a claim & less entitlement. For example: Let's say you bought your current home for $250,000. That means you used $62,500 of your entitlement. If you wanted to go out a buy a new home at 300K, you may not have enough entitlement left depending on what the VA county loan limits are for the area you want to buy in. You will probably need to sell the house prior to buying your new home.

2) There is a chance that you will have to show a clean 12 month housing history in order qualify for a new VA mortgage so you want to continue making your payments on that loan.

 

Be careful not to over due it on "re-establishing" your credit & keep your credit card balances at zero.

Make sure you have a mix of account types.

 

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