Anyone purchase a home after a bankruptcy?

[Chris~n~Jen]

If so, how long after the bankruptcy were you approved for your mortgage?

I have a lot of credit problems stemming from my college and early twenty years. We just had an offer to purchase the condo that we are currently living in. It is a great offer and is making me so sad that because of credit problems we will probably not be able to obtain a mortgage. I have been reading a lot and was even told by one lender that we could probably get a mortgage sooner by me filing bankruptcy. :eek:

I'm just trying to find anyone with expierance with this. I'm reading a lot about first time home buying but they all say how you have to have good credit and ours just really stinks. :(

[kam]

I've never done this and can't say anything for sure, but there are some things to consider:

1) bankruptcy laws have changed dramatically. You will most probably need to pay back all of the debt. It doesn't offer the clean slate it once did.
2) the rate on the mortgage may make it so high that it's not worth considering buying vs. renting.

Sorry I can't be more helpful - just things to keep in mind.

[Jenyfer9]

If it helps at all, you should know that it is easier to get a mortgage than a car loan... so if you have a car loan, there may be hope.

I would try talking to a mortgage broker. Lots of times they'll work to find something when a traditional bank may not.

[jennylou]

I would try talking to a mortgage broker. Lots of times they'll work to find something when a traditional bank may not.

Ditto this. You'd be surprised how many people can get mortgages. You'll pay a higher interest rate, but you can always refi later and get a lower rate. My very good friend had bad credit and her DH had very little credit, their interest rate is like 12%, but they were approved.

[Columbo]

<delurking>

My husband had declared bankruptcy years before we met. The good news is, it no longer affects he credit score directly. However, since the bankruptcy covered so much outstanding debt, it was all wiped from the credit record and now he has a very, very short credit history. Unfortunately, this is now used against him when shopping for a mortgage.

Just some info you might want to look at. Have you checked your own score?



Jen

[babyjinks]

My husband and I have purchase after bankruptcy he was not included in the bankruptcy. I filed before we were married because of medical bills. They required a letter of explanation when we applied for mortgage. His credit was not steller mine was still better even after bk but we got 6% 30 year fixed and seller paid closing costs. We also got down payment assistance so we paid no down payment at all. Shop around :) There is hope it does help if you have some things reestablishing credit even things like electricity and stuff showing you pay on time :) Hope this helps..buying our house was the best thing we ever did :) Oh we didnt go top of budget either we ended up paying less for mortgage than rent :)

[amd1005]

A lot of companies will not approve you until the bankruptcy is at least 2 years old....meaning it was discharged two years ago. I work for a bank underwriting mortgages and I know that this is the standard here. I also used to work for a broker and they had a very similar policy. (Actually, I don't think we ever were able to approve anyone with a BK at all!) There may be brokers out there that will be able to get you approved, but like another poster said, it will most likely be for a very high rate. And keep in mind that you probably wouldn't be able to refinance for another 2 years after that. But, my advice is to shop around, and I'd do it before you file. Even if you just call different banks and lenders and ask them what their standard policy is. It doesn't hurt to try. Even with multiple companies. As long as it's all within a 14 day period, all the inquiries will only count once against your credit.

[j.d.l.102205]

I suggest definately talking to a mortgage broker. DH filed for bankrupcy and not very good credit at all. I on the other hand had ok credit just my debt to income ratio was too high. We do have a higher interest rate (9% I think) but the sellers paid the closing costs and we had no down payment. Our mortgage broker is giving us a free refinance in two years. Bankrupcy will be gone and credit cleaned up and hopefully most of my cc bills will be gone. I was truly surprised with our outcome. I didn't think we were gonna get anything good at all. We were even preapproved for an ok amt (ok for my area and for our first house.)

[Chris~n~Jen]

Thank you all for your responses! You have given us a lot to think about. Also a lot of the feedback has been encouraging!

We talked about it last night and we are going to contact a lawyer to find out how the new laws have changed. We had talked to a lawyer a couple of months before our wedding and the law changed. We were told at that time that we didn't really need to rush because the new laws weren't really going to affect us in our situation all that much. We've also come to realize that we will have to wait a couple of years (at least) to own a home. So in the meantime we will work on setting our budget and paying off debts that won't be obsolved and of course saving as much $$ as possible for the down payment.

Thank you again, you have all been so helpful! :D