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mrsP2b

Can we get a mortgage?

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Husband & I have terrible credit history. Before we were married, I filed Chpt 7 & was discharged Aug 04. Before I did, I had multiple late payments & bounced checks. Since then, I have one medical bill that should've been included in bktpy + on all 3 CR's it says I owe a balance of $15k to Bank One, which was also included in bktpy.

** How do I fix these two incorrections?

 

Before we were married, Husband had multiple late payments & non-payments on utilities & 3 credit cards. Balance range from $100-$500. He bounced multiple checks, but paid the banks back.

 

I understand we are in a terrible spot, but want to buy a condo/home for about $150k. We can save $2k/month, and have $5k saved so far. We don't plan on more than 3% down.

 

** Do we take advantage of VA home loan, or 1st time home buyer loan? What's better?

 

We realize we'll have to pay a higher interest rate, and are ok with that while working on re-establishing our credit. We want something on the cheapest end possible in our area. We can get letters from our landlord proving we've paid our rent on time every month if that'll help. I've also paid my car on time each month for 4 years. My average FICO is about 618. His is a little lower, about 600. Before my bktpy my FICO was 720+, so I have major potential to get my life back on track! All our financial problems were due to his health, which is now on the right course.

 

Soooooo, if there's any mortgage lenders out there, would we even be able to qualify for a loan???? If so, how much & at what interest rate?

 

If we go talk to someone in person, do they charge a fee? What's the procedure to begin pre-approval?

 

I should add, I make $46k/year minus taxes. Husband gets disability $2k/month with no taxes taken out.

Edited by mrsP2b

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My understanding...

 

Since yours is the majority income, your scores will count. You mentioned 618 average, but what are your actual scores (and are they from FICO)? Scores of 550/550/754, 580/610/664, and 500/674/680 are all 618 average but very different midscores.

 

Depending on what your car payment & any other credit payments are-you should be ok w/ income & expected loan amount. From what I've found out, subprimes (due to recent bk that is what is available) allow 50-55% DTI.

Edited by StaciMM

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My understanding...

 

Since yours is the majority income, your scores will count. You mentioned 618 average, but what are your actual scores (and are they from FICO)? Scores of 550/550/754, 580/610/664, and 500/674/680 are all 618 average but very different midscores.

 

Depending on what your car payment & any other credit payments are-you should be ok w/ income & expected loan amount. From what I've found out, subprimes (due to recent bk that is what is available) allow 50-55% DTI.

 

_______________________________

I'm guestimating at my actual scores b/c they're not in front of me, but they are around 590, 618, 620. We have NO credit cards, thus NO debt at all. The car payments were $200/month for 4 years.

 

*** What is "DTI", and what does "50-55%" mean?

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DTI = Debt To Income ratio, which means if your income is $2000/mo and you have $1000/mo in bills (that report to credit), it's 50%.

 

Bank One/First USA is notorious for reporting balances on BK'd accounts, you'd do well to follow the standard credit dispute procedures to attempt to get it corrected / removed. If you have any questions on that, check the credit forum.

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As long as you have a score of atleast 600 you can go stated sub-prime 100% if necessary. However, a full doc loan will be a better rate, this requires a 580 score for the best rates.

 

If you have any money to put down your rate will improve.

 

VA doesn't really have a seasoning on BK, but I have never seen them approve anyone approved without 3 years seasoning.

Edited by revans513

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As long as you have a score of atleast 600 you can go stated sub-prime 100% if necessary. However, a full doc loan will be a better rate, this requires a 580 score for the best rates.

 

If you have any money to put down your rate will improve.

 

VA doesn't really have a seasoning on BK, but I have never seen them approve anyone approved without 3 years seasoning.

 

 

REVANS - just curious, how much do you think we could qualify for? What interest rate do you think we'd be around? We're in the chicagoland western suburbs.

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As long as you have a score of atleast 600 you can go stated sub-prime 100% if necessary. However, a full doc loan will be a better rate, this requires a 580 score for the best rates.

 

If you have any money to put down your rate will improve.

 

VA doesn't really have a seasoning on BK, but I have never seen them approve anyone approved without 3 years seasoning.

 

 

There is 2 year seasoning on a VA loan for a chapter 7, you can get in just after 12 months if the result of the BK was due to something out of your control, eg. job loss, or medical. In order for this to work you will have to put together a good case for the person. VA guidelines are basically the same as FHA as far as chapter 7 . You can buy a house while in chapter 13 with the courts approval and 12 months of chapter 13 pay history.

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what does "seasoning" mean? I had Chpt 7, not 13. What does that mean for me?

 

 

For a VA loan you need to be out of the bankruptcy for 2 years unless it was a documentated situation that was out of your control and that is up to the underwriter to determine , then you can get a VA loan after 12 months. Who has the VA benefits you or your spouse?

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Gosh thanks Nick for clearing up the VA confusion! You are always right on top of guidelines. I think that is one of the most important elements to lending. So many lack direction and determination to learn as much as possible.

 

3 years out of foreclosure is what the other posts were likely mixing up.

 

I know this does not pertain to you but 12 months paying a chapter 13 may be able to do a bk buyout too. Refinance.

 

mrsP2b,

Do you have 12 months cancelled checks for rent? How about 24?

 

If so I bet you can do this. Especially if 24.

 

If not there is still a great chance.

 

Husband & I have terrible credit history. Before we were married, I filed Chpt 7 & was discharged Aug 04. Before I did, I had multiple late payments & bounced checks. Since then, I have one medical bill that should've been included in bktpy + on all 3 CR's it says I owe a balance of $15k to Bank One, which was also included in bktpy.

** How do I fix these two incorrections?

 

File a credit dispute with all 3 repositories and include your complete bk filing and discharge. Also contact the creditors in the meantime asking them to update the report.

 

 

edited to remove solicitation.

Edited by fla-tan

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You mentioned you have no revolving tradelines now. Opening one or 2 can help improve your credit file.

 

The DTI is a ratio that helps determine how much you can qualify for. It considers your income & any obligations that report, such as mortgage payment, car payment, student loans, credit cards, etc.

 

Example:

 

Monthly income of $3500

Car $300

Student Loan $75

Credit Card minimums $100

 

50% DTI would allow $1750 for debt, so by deducting the $300, $75, and $100, you're left $1275 for your max monthly mortgage expense. A 55% DTI would allow a mortgage payment of up to $1450. Probably not best to go w/ the maximum allowance (unless there is other income that you're not factoring in).

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mrsP2b,

Do you have 12 months cancelled checks for rent? How about 24?

 

If so I bet you can do this. Especially if 24.

 

If not there is still a great chance.

 

 

My husband is the disabled veteran who would get the VA home loan. Does anyone know if disabled veterans get more allowance, vs. regular veterans? I know we'd get assisted living expenses to add ramps or railings, etc. but as for the mortgage part goes, I don't know if he'd get additional financial assistance for also being disabled AND a veteran?

 

Pardon my ignorance, but how do I go about getting cancelled checks? Are these the cashed checks the bank sends back to you? If so, I have these for the past 5 years with two different landlords. BUT we had a falling out with the first landlord so I don't want to use him at all if not necessary. My current landlord loves us & I'm sure would write a nice recommendation letter if needed.

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Pardon my ignorance, but how do I go about getting cancelled checks? Are these the cashed checks the bank sends back to you?

 

Yes they are. See you are pretty smart afterall :-) That is very strong!!!

 

The VA option would only work if the Chapter 7 was 2 years old. (Some use file date and some use discharge date)

 

There is a loan available secured by VA pension. I cannot seem to remember the institution that handles these. I will post it in the am tomorrow unless someone else can fill in the blanks. But, again you cannot do VA right now.

 

A nice idea might be to get into a loan and refinance it to a VA or FHA. The rates and requirements (other than military req. for VA) are about the same.

 

Or keep re-building. I like the idea of getting a few credit cards to help but if you do I think it will take 3-6 months for them to have a positive impact on your score and you want to try and only utilize about 40% or less of the credit available.

 

I am not sure on the increased benefits for dissabled veterans. I am thinking the answer is no but I am not 100% sure. I do know that the more years of service has an impact.

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Also the post about DTI is very relevant but I think you have considerable income. VA Benefits are grossed up 125% for qualifying purposes.

 

You would be looking at 45-50% max. 45% would be a better rate in most cases as well. Many of the more aggressive mortgage lenders do not like the combination of BK less than 2 years and 45%+ DTI.

 

But, like I said I think the calculation will be very low and another good strong compensating factor in addition to your rent history.

 

Compensating Factors are basically other reasons to make loans besides credit score or in leiu of not meeting 1 requirement or more specified by the lender.

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Gosh thanks Nick for clearing up the VA confusion! You are always right on top of guidelines. I think that is one of the most important elements to lending. So many lack direction and determination to learn as much as possible.

 

3 years out of foreclosure is what the other posts were likely mixing up.

 

I know this does not pertain to you but 12 months paying a chapter 13 may be able to do a bk buyout too. Refinance.

 

mrsP2b,

Do you have 12 months cancelled checks for rent? How about 24?

 

If so I bet you can do this. Especially if 24.

 

If not there is still a great chance.

 

Husband & I have terrible credit history. Before we were married, I filed Chpt 7 & was discharged Aug 04. Before I did, I had multiple late payments & bounced checks. Since then, I have one medical bill that should've been included in bktpy + on all 3 CR's it says I owe a balance of $15k to Bank One, which was also included in bktpy.

** How do I fix these two incorrections?

 

File a credit dispute with all 3 repositories and include your complete bk filing and discharge. Do not include your BK filings when you dispute. That is absolutely the wrong way to go. Also contact the creditors in the meantime asking them to update the report.

 

 

edited to remove solicitation

Edited by fla-tan

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Husband & I have terrible credit history. Before we were married, I filed Chpt 7 & was discharged Aug 04. Before I did, I had multiple late payments & bounced checks. Since then, I have one medical bill that should've been included in bktpy + on all 3 CR's it says I owe a balance of $15k to Bank One, which was also included in bktpy. Dispute the Bank One as incorrect. Do not send BK papers as another poster suggested. It is not your responsibility to do the CRA's work for them. Simply stating the the entry is incorrect should be sufficient. As far as the medical bill, you would need to speak with your BK attorney about having the BK reopened and having that included. Also, your BK attorney can contact Bank One and inform them that if they do not correct their reporting status that the BK court will be notified and they, Bank One, will be subject to contempt of court charges. In addition, I believe (though you should check in the Credit Forum for this) that Bank One may be subject to monetary damages that you can collect.

** How do I fix these two incorrections?

 

Before we were married, Husband had multiple late payments & non-payments on utilities & 3 credit cards. Balance range from $100-$500. He bounced multiple checks, but paid the banks back.

 

I understand we are in a terrible spot, but want to buy a condo/home for about $150k. We can save $2k/month, and have $5k saved so far. We don't plan on more than 3% down.

 

** Do we take advantage of VA home loan, or 1st time home buyer loan? What's better? Because you filed BK less than 2 yrs ago you probably will not be eligible until Aug of 2006 unless the BK was caused by circumstances beyond your control. These circumstances include things like job loss, illness, divorce...etc. What was the reason for the BK? If DH can qualify incomewise on his own then the BK probably will not have an impact. What would have an impact for DH would be what his credit looks like over the past 12-24 months. Has he had any lates or collections in that time period?

 

We realize we'll have to pay a higher interest rate, and are ok with that while working on re-establishing our credit. We want something on the cheapest end possible in our area. We can get letters from our landlord proving we've paid our rent on time every month if that'll help. If a VOR (verification of rent) is needed, then having copies of the last 12 months rent checks would be best. I've also paid my car on time each month for 4 years. My average FICO is about 618. His is a little lower, about 600. Before my bktpy my FICO was 720+, so I have major potential to get my life back on track! All our financial problems were due to his health, which is now on the right course. This is the best news of all, that his health is coming back.

 

Soooooo, if there's any mortgage lenders out there, would we even be able to qualify for a loan???? If so, how much & at what interest rate? There are lenders that will normally be willing to provide you with a mortgage based on what you have written. You should be able to qualify for 100% financing if you wish.

 

If we go talk to someone in person, do they charge a fee? What's the procedure to begin pre-approval? Some brokers will charge an application fee if you apply for a mortgage with them. However, if you ask first then you would know.

 

I should add, I make $46k/year minus taxes. Husband gets disability $2k/month with no taxes taken out. This would give you a combined gross monthly income of approx $6300. So you should be in reasonable shape for a mortgage.

 

 

fla-tan

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