Getting a mortgage while enrolled in a Debt Management Plan?

Question

Does anyone know of any types of loans or lenders who will consider applicants who are currently enrolled in a debt management plan (DMP) or Credit Counseling Program (CCCS)? I have been making monthly payments on my DMP for almost a year, but have several more years to go. I would really like to buy a house. I would be a first time home buyer. Does anyone know whether this is possible?

Answer 1

Actually, I know someone who was in the same boat. Had a credit score of 560, was approved for an FHA loan through a local bank, but had to get a letter from the debt management company saying it was ok to assume new debt.

Answer 2

Depending upon the type of product you look at with regards to conforming products..if your broker runs you automated, you may receive favorable financing as DU does not recognize consumer credit counseling as a negative factor in your credit profile, if you can not get an approve-eligible or EA1,2 than you most likely will be limited to FHA or subprime, and depending upon your score, you may be eligible for 100% financing. The subprime market has under-gone many changes recently, but there are still a few lenders that will go down to 580. Typically you'll need 600-640 now with many. The seasoning may be of issue as a debt managed program for maximum financing requires 2 years from entry date. There are, I think two that will allow for 1 year or more. Another option would be to have your debt managed program dismissed with-out prejudice (meaning you quit the program and was not kicked out). Now before a rush to do this if that's an option for you, let me explain the perils to this.. 1: your payments will go back to their original amount plus any deferred interest. 2: You will have to be qualified of the entire payments. 3: If you chose to re-instate your program after purchase of your home, the creditors may not agree to work with you. The good news, Most Subprime lenders allow for dismissal w/o prejudice seasoned 1 day or prior to application for maximum financing. You will still need to meet additional conditions. Hope this help...Good luck!

BTW: any subprime lender will provide financing for this type loan with scores down to 500..the key is, how much financing do you need. @ 500...max is typically 80-85% requiring 15-20% 2nd, gift, or down payment, 540 is @ 90%, 580 @95-100 and so on. FHA will not allow any derog last 12 months so find yourself a good broker who knows these programs.the consultation is free!

ALSO: Fannie Mae, Freddie Mac, FHA, and VA's are NOT guaranteed loans.

Answer 3

I know atleast one loan officer who specializes in both FHA loans and chapter 13 buyouts (your debt management deal will look like a chapter 13 to most large lenders.) Take 30 seconds and fill out the free evaluation form at

www.totaldebtsolutionsllc.com

and we will have a loan officer contact you tomorrow. Good luck.\

Answer 4

Any broker can get you a loan as long as you have a 560 (some can do even lower) or above credit score. If someone tells you they can't, just go to the next office. A lot of brokers also offer credit repair for free, so don't worry, it's easier to get a loan for a home than for a car. And Ask them about fannie mae and hud loans (these are garanteed loans).

Answer 5

You might try to check with your financial institution. I think you would be able to get a home loan because your credit report would show a curent payment history and if this is your first home you may qualify for a first time home buyers program

Answer 6

I was told in the past that using a debt management is jsut as bad as filling bankruptcy when it comes to trying to get a mortgage. Either way it looks like you can't pay your bills / responsibilities

(I was told this by a mortgage broker)

Answer 7

Good luck. I doubt any lenders are looking to give more debt to someone who has to enter a debt management plan to resolve what they already have.

Answer 8

And the same question shows up again

Answer 9

Probably not