Bankrupcy and mortgage?

Question

My husband filed a bankrupcy 2.5 years ago (I was not included). I'm now ready to purchase our first home. I have a credit score average 719. Can we get a mortgage with good rates combined? Would his bankrupcy prevent us from getting a mortgage? Or should I apply a mortgage using my name only. Problem with that is, we need our income combined to get a higher loan amount. We both have full-time jobs. What do you suggest?

What about if I have 20% down payment? Would that boost our chance of getting good and low rates?

Answer 1

SUGGESTIONS:

1.) Apply for a mortgage through a broker: Both Spouses on Application.

> Request for a Full Doc Program.

> Submit BK-Papers: all schedules plus discharge papers.

> Submit Explanation Letter of BK

> If BK is Chpt. 13, All Items on BK must be paid-off prior to escrow

> Documentation requirements will be provided by your L.Officer.


2.) Apply for a mortgage alone, as an individual, under STATED INCOME or NO RATIO program without your husband.


EITHER WAY, both 2 suggestions will have a definite risk-mitigating rate pricing adjustments on your interest rates.


GOOD QUESTIONS TO ASK your Loan Officer would be:


1.) What are the rate adjustments based on my scenario?

2.) Is/Are the rates based on par-price or with YSP/rebate to broker?

3.) How much did you allot for YSP/rebate allowance on my rates?

4.) Compare and/or Explain for me the following programs:

--- 2, 3, 5, 7, 10-year Interest Only Programs

--- Pay Option Mortgage(s): MTA or COFI Indexes (NegAm)

--- 2, 3, 5-year Fixed Rates, Fully-Amortized with 40-year Term option


5.) Which two of the programs may be combined for an 80/20 or 100%?


6.) How many years is my standard pre-payment penalty?


7.) How much do I need to pay to buy-out the pre-pay penalty?

If you're here in California, I'd be able to help. I hope this information will help.

Answer 2

Hello -

Yes you can get a loan with a good rate. The first thing we need to know is if the bankruptcy was a Chapter 13 or 7.

Let me assure you and say that we can provide financing for people one-day out of bankruptcy. Here's what you will need to get ready for a review.

Make sure you have the final discharge and all the schedules. The discharge will tell you the final discharge date and the schedules will tell you what was included in the bankruptcy.

We then will compare the discharged accounts with the credit report as, quite often, items which were included in the bankruptcy show up as currently past due on the credit report.

There are a variety of ways we can structure your loan. We might even be able to increase your credit score. Let me provide you a FREE PRE-QUALIFICATION AND CREDIT REPORT

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Answer 3

Your husbands bankrupcy has been discharged over 2 years ago so you won't have any problems getting approved, but with him on the loan it may not be the best rate available to you and your good credit. I recommend contacting a mortgage broker as they have hundreds of lenders available. You may want to have them check current rates going with a full documented loan with you both and also a stated loan with just you. Compare the options and decide whats best for you and your husband. I hope this helps you but if you need any help or have any additional questions please feel free to email me or visit my website www.dantadgerson.com.

Answer 4

With a bankruptcy being over 2 years ago it shouldn't be a problem in getting a decent rate especially with that kind of credit score. Who makes the more income? What kind of a bankruptcy was it? Has he re-estabilished credit since then? In my position I deal with bankruptcy issues all the time if you have any questions feel free to drop me an e-mail.

Joe Hermann
1st Columbia Mortgage Corp.
[e-mail]

Answer 5

Lender will give you money for sure. Probably charge you a higher interests rate and extra insurance on the loan for not having the down payment or good credit.

Would you consider delaying your plan? As housing market continues to slump, it might save you 10% simply by waiting for a few months. Another way to look at it, you can increase profit by 10% when you are ready to sell it.

http://money.cnn.com/2006/09/08/real_estate/caught_in_the_bubble/index.htm?postversion=2006090814
http://money.cnn.com/2006/09/05/real_estate/Ofheo_home_prices/index.htm?postversion=2006090514

As housing market continues to slump, if you don't plan to delay your plan, please interview several and pick a good realtor or agent.

Bad ones will talk you into buying the largest property at your credit limit. Good ones will find you a good deal (Sellers are offering discount and incentives now).

Try to stay away from Adjustable Mortgage, because 30 year fix mortgage rate is very low right now. There is no reason to use Adjustable loans except fatter commission for loan agents.

Interests only loans are not good iether. Mortgage payment consists of two parts: interests and principal. Interests are like rent, which doesn't add to the equity to your house. It simply disappear as your pay it. If you want to use interests only loans, might as well rent, especially during market downturn, because housing price won't appreciate.

Finally, for tax benefits, talk to your CPA or tax accountant. Do not consult finance with realtors or agents. They get commissions when you sign the check!

Good luck!

Good article when you want to put in bid, negotiation.
http://biz.yahoo.com/brn/060909/19463.html

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Different perspective:

It is a myth that renting is always worst off than buying.

Rent vs. Buy as Housing Market Continues to Slump

As housing market slump, it is easier to calculate "Rent vs. Buy" scenario. Because "appreciation" is no longer a factor.

Mortgage payment consists of two parts: interests and principal. Interests are like rent, which doesn't add to the equity to your house. It simply disappear as your pay it.

If interests portion of the mortgage payment is roughly equal to rent of equivalent property, then it is a decent buy.

For example, let's buy a $500,000 condo with 0% down and apply interests only loan (just like renting a place). Mortgage payment would be $3250/month. It is a bad buy, because you can enjoy same property for $2000/month.

Please note that I assume the tax benefits from home cancel out fees from home association and property tax. For more accurate calculation, consult with your CPA or accountant. But NOT your realtor, whom will say anything to get the deal to go through.

And again, if you like a particular property, then paying more may be reasonable. You are the only person who can decide how much more premium you are willing to pay.

Answer 6

You're not likely to get much in the way of reasonable rates with a recent bankrupt as a co-borrower. Clearly going it on your own is the only practical way. Hope you're not in a community property state.

Your husband will most likely have to sign a statement acknowledging that he has no ownership rights in the property and that he will never attempt to assert any title to the property.

Answer 7

talk to the bank or a mortagage company. my husband and i bought a house a year ago and i have a bankruptcy in my history. if you need the combined income you might should just purchase at the higher rate and then refinace in a couple of years. either way it's better than paying rent.

Answer 8

Stated income and either stated assets or verified assets is a way you can get a good loan with just you on the mortgage.