Mortgage before chapter 7 bankruptcy?
I filed chapter 7 bankruptcy approximately 18 months ago. My credit report in the past 18 months has no negatives – car payment, 1 credit card and utilities have been paid on time. My credit score is 635 – not good but not terrible. I’m interested in purchasing the home that I have been renting as the owners have decided to sell. The home is a small 3 bedroom in good shape. They are merely asking ,000. I would have 10% down, but just barely. My current rent payment is more than what my monthly mortgage payment with insurance and taxes would be. I am a single woman with a fairly good income (60k). My question is – where would I be willing and able to get a loan? With the economy the way it is, my local banker is unable to help me. The loan officer had stated that 2 years ago, my credit score and past bankruptcy would have been OK, but now they have tightened his loan requirements. some information would be much appreciated. Thank you.
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February 7th, 2010 at 5:01 am
A bankruptcy doesn’t "lock" loans, and in the past it hasn’t been uncommon for folks to get loans even a few months after bankruptcy — face it, they are much more credit worthy after discharging a crippling amount of debt. However, as you pointed out, much of that has changed in today’s economy. In any case, you are likely to pay a higher interest rate, but as you would still be paying less per month *and* building equity, it’s still a win.
I would try other local banks/mortgage lenders first; don’t necessarily apply, just ask for an appointment and talk to a mortgage specialist to see if you have a chance. You could also see if the owners are willing to take a note on the house; unlikely, but maybe they are just in need of a quick chunk of cash and your 10% would get them where they need to be.
Last, you could try somewhere like lendingtree.com; never used it myself no idea how well it works, but if the TV commercials are true it would expose you to several lenders at once.
Good luck.
February 7th, 2010 at 5:01 am
Usually a bankruptcy will block any loans for a period of 7 years. If you can get a loan, it will be at a very high interest rate. However, I would go ahead and inquire at several banks. The worst the banks can say is "no".
I hope you get the mortgage.