home loan SOON after BK?

[msdivadj]

OK so here is the short version of the situation. We are planning to file bk - should be discharged within 2-3 months from today. Right now, I work full-time and hubby works part-time. Due to stress at my job basically taking it's toll on me I will be quitting next year; AFTER I have our 2nd child (recently found out we're pregnant with #2 after 2 years of trying - again, high-stress job). so the problem is this - I am starting to freak out that we'll never get a house because his income (even oncle full time) will be less than 1/2 of mine. SO I am wondering if there's SOME way we can get a loan like VERY soon after BK so that we'll have a house and what we would have been paying in rent (about 800/mo) we can pay towards a house. I couldn't care if it's a dump since I am the handy one and since I will be home I will have the time to fix it up (well amidst diaper changes, naps, etc.) SO what are your thoughts? anyone? Hubby thinks I am crazy by the way, but since I am going from being the breadwinner I am really starting to freak out about it and worry about us renting forever

[msdivadj]

oh yeah - the whole reason I am thinking this is so that we can utilize my income for getting our loan before we don't have that income anymore to document for a loan

[computergal]

I am not an expert here but with the turn in the lending market, I would think the answer is no.

[Zib]

If you are using your income only to qualify; knowing you will lose the income shortly thereafter, you are possible setting yourself up for serious cash-flow problems once the baby arrives. You will have trouble getting a loan immediately after BK as your scores will drop before they start rebounding (2-3 years down the road). If you are able to get a loan (very doubtful), you will probably need around 20% down.

 

Good luck with the new baby!

[liverichly]

Only feasible program would be Bank of America's Community Accommodation program, requires a 620 score, can't make more than 80% of your county's median income or must buy in a low-to-moderate income census tract, and has no requirement on time since BK or FC and a debt ratio to 60% is permitted (in some situations higher). Patelco CU is BK friendly, they require a bit of equity/down payment and your debt ratio must qualify, and they don't lend everywhere, but worth calling them up. Other than that you are looking at having to wait 2 years for conforming/100% financing or a down payment would be required for a sub-prime loan program. Best advice is to wait until the BK is discharged, check your credit, and see what options are available then. Buying a home also has a lot of extra expenses than renting a place does not, so have to plan carefully with a new mouth to feed too (congrats on getting pregnant).

[CallMeJo]

msdivadj,

 

You didn't ask & feel free to ignore everything I am writing, but I'm going to write it anyway in the hope that you will please read it.

 

 

 

Right now:

 

You're having to file BK with you, your husband, & 1 child.

 

That is with your FT income + his PT income (which @ FT will still be less than 1/2 yours now).

 

If that happened bc of emergencies, future emergencies are not completely unreasonable to think about.

 

If that happened bc of poor financial decisions, the best case scenario is that you will not make those kind of decisions in the future.

 

 

 

 

Now you want to be able to buy a house.

 

To qualify for your own home, you think that you will need to document your FT income + his PT/FT income @ 65% DTI (gross) or less.

 

But when you have the baby, you will have his FT income & the mortgage loan. & your actual take-home pay will be not even 50% what it is now. In fact, if I'm figuring this right since you didn't give us actual #s, at best it is probably going to be 40% what it is right now. But you will have 1 more child, too.

 

 

 

I really do not think this is a good idea. Even if you think home prices will continue to appreaciate in your area, the likelihood that this could turn into a foreclosure is pretty high.

 

 

 

 

Please think about this before buying a house.

Edited August 6, 2007 by CallMeJo

[ken(tx)]

Thanks to CallMeJo for writing what needed to be asked. While we do not know all of the information about your situation one has to ask the questions CallMeJo asks because they are prudent.

[OperationHOMEOwnership]

This reads like a foreclosure waiting to happen, thats even if a lender gives you a mortgage.

 

I completely understand what it is like to want something SOooOOo bad, but patience & preparation is key here...if you think you are stressed now, imagine when you cant afford your home's carrying charges and your family needs $$$ in other categories.

 

IMO I would place this as a LONG TERM goal, due to your past financial decisions.

[dgilbert]

buying a home right after having a new baby is stressful in and of itself. if i had it to do over again, i would have kept renting until our baby was a year old over having to go to the doctor all the time. when we bought we were in tight financial times and nearly could not make it. heck, we are still on a tight budget almost 3 years later.

 

think about this, what will you do when the baby has to have tubes put in it's ears, the HVAC system has to be replaced, and you just came home to a flooded kitchen? you will most likely lose the home you stressed over, and you may still have to pay the mortgage co a pretty penny to get out of the deal.

 

i recommend you hold off a year or so.

[msdivadj]

Right now:

 

You're having to file BK with you, your husband, & 1 child. CORRECT

That is with your FT income + his PT income (which @ FT will still be less than 1/2 yours now). ALSO CORRECT

If that happened bc of emergencies, future emergencies are not completely unreasonable to think about.

NOT BC OF EMERGENCIES

 

If that happened bc of poor financial decisions, the best case scenario is that you will not make those kind of decisions in the future.

VERY POOR FINANCIAL DECISIONS - BOUGHT 2 NEW CARS TO THE TUNE OF $1100/MONTH

Now you want to be able to buy a house. CORRECT BECAUSE I DON'T SEE US QUALIFYING FOR QUITE SOME TIME (OR AT LEAST 2-3 YEARS AFTER I GO BACK TO WORK) WITH JUST HIS INCOME

To qualify for your own home, you think that you will need to document your FT income + his PT/FT income @ 65% DTI (gross) or less. HE WORKS ONLY PT NOW - MAKING ANYWHERE FROM $700-1200/MO (SALES)

But when you have the baby, you will have his FT income (I AM ASSUMING THE 700*2 JUST TO BE SAFE) & the mortgage loan ($700 WHICH WOULD BE CHEAPER THAN OUR RENT NOW). & your actual take-home pay will be not even 50% what it is now (ALSO CORRECT). In fact, if I'm figuring this right since you didn't give us actual #s, at best it is probably going to be 40% what it is right now. But you will have 1 more child, too. THE FACT THAT WE HAVE 1 MORE CHILD DOESN'T REALLY MAKE OUR EXPENSES GO UP THAT MUCH. I HAVE LITERALLY EVERYTHING I NEED FROM LAST TIME, WE ARE CLOTH DIAPERING AND THERE IS NO CHILDCARE COST SO THE ONLY COST IS GOING TO BE FORMULA

 

While I totally appreciate and understand where everyone is coming from I am just trying to look out for my family long term; and I feel as though I am being flamed here (good thing my skin is thick). If we can get a mortgage for less than we are paying in rent right now, then that seems to be a good thing. Even WITH the added costs of a house, I am not worried since I have a 401K that I can tap into once I quit my job. Also, we are saving up that extra money (that was going for those dumb cars) and we will have that cushion as well. Unfortunately not knowing how much he will be making leaves me to believe that no lender will ever lend to us for anything other than a trailer (and maybe not even that) based on his income (if we lowball it at about $24K) correct me if I am wrong on that. After the bk we will have NO DTI. well except for rent and utilities. We have gone cash only and plan to continue to do so. With the exception of getting one card to help bring up our scores. We already have a car (paid for, a to b-er) and will NOT be buying new again; I have learned my lesson on that one.

Edited August 6, 2007 by msdivadj

[Zib]

You're not really being flamed. In essence you are trying to qualify for a house without sufficient income. You said you wanted to buy the house while you were both working, knowing full well you would quit your job shortly thereafter (akin to fraud). If you go bad on rent, you find another place to rent. If you go bad on a mortgage, you lose all your equity and wind up paying tons of legal fees. You will also have a very hard time buying a home in the foreseeable future. The other issue is the fact that you may not even be able to be discharged in BK. It is much harder to do so than it was two years ago. I personally feel you are coming at this all wrong. You seem to be rushing into buying a house when you should be planning for your new baby, with the thought of buying a new home when you are able. Sorry, but it makes no sense.

 

All the best.

[DesertRose]

I have to chime in and agree w/what the others have posted here. The plan sounds disastrous to me as well.

 

One thing that really jumped off the page was the statement about being able to *tap* your 401K should you run short of cash. This spoke volumes to me about the need for some personal finance education. A 401K is not an ATM. Not only are there penalties for *tapping* it you will also pay double taxes. It is not a savings acct.

 

Pls for the sake of your children take the time to sit down & meet with an expert, perhaps a CPA & get some clarity on this situation. Also many community colleges offer a personal finance course which I recommend to everyone.

 

Fortunately with lender guidelines tightening as they have I don't imagine this loan is possible at all. But maybe this is a good time to get more informed about personal finance & come out of this period in your life wiser & well equipped to manage your finances in the future.

 

I also have not read anything here that I would consider a flame. Just concerned people w/a lot of expertise in the mortgage & finance world trying to help you. I get the feeling it's not at all what you wanted to hear, thus the shoot the messenger syndrome.

 

Hopefully someone else in a similar situation will read what has been posted & avert disaster.

[KatyG]

OP- I too, agree with the above posters... There is no lender that will grant you a home loan with a BK that has been discharged so recently. The guidelines are typically 2 years POST discharge with NO LATES on anything else. If someone offers you a loan, you need to hang up the phone. You'll be getting involved with a predatory lender that is going to put you so far upside down that you'll be doomed for foreclosure.

 

Go for the BK, establish GOOD credit handling, and learn how to budget. One you're 2 years post BK, you'll have a shot at getting a decent loan.

[udsweetpea]

You are not being flamed here. People are trying to help you be realistic. Let's just say you file bankruptcy and a lender gives you a mortgage, you might be looking at an interest rate of 12% (an estimate). With a mortgage payment of $700 including taxes and insurance, you'll be looking at a loan amount of around $54,000. I'm not sure where you are located, but that is extremely hard to come by these days.

 

You need to be honest with yourself. You are filing bankruptcy because you are bad with money. Why would someone lend you money now without you showing you can be responsible?

[Genna]

No one is flaming you. They are just telling you the truth, which always hard to listen to when it's not what we want to hear.

 

Your statement about tapping into your 401K stood out to me as well. You do realize that you will have to pay penalties for withdrawing that money? Have you considered how that will affect you when you file your taxes? You could end up owing money come tax time, and believe me, the IRS is not a creditor that is patient or easily ignored.

 

I think your plan is a recipe for disaster. Even if you will have no debt aside from rent after your discharge, you still need to take some time to save money and practice living on a budget. Having worked in the subprime mortgage industry, I worked with clients who did the same thing you are contempleting, and it very, very rarely worked out well for them.

Edited August 8, 2007 by Genna