two questions

drb419 · Joined: 31 May 2005 Posts: 7

What are the chances of someone who has been through Chapter 7 bankruptcy getting a loan to purchase a home?
If a loan is possible, what kind of interest rates should they expect to pay?

I went through bankruptcy a little less then a year ago. My credit score is 600. I know it sounds pretty bad so far, and I realize that I put myself in this position.
However I now have zero debt, my car is paid for and my monthly living expenses are under $1,000 (rent on my house is only $250/mo)....I've lived at this residence, and had the same job for over 12 years. My annual income is $40,000 and I live in an area of the country where a nice home can be purchased for $60,000-$70,000. I'm only interested in a 15 Year mortgage.
Any help with these questions would be greatly appreciated....

Haplo · Joined: 20 Jan 2005 Posts: 2422 Location: Springfield, IL

You won't have any problem getting a loan, but the rate will be a slight bit higher than standard. Depending on the circumstances of your bankruptcy, you may be able to get a government loan, but it would have to be some pretty specific circumstances (Starting with, you didn't just wake up and stop paying your bills one day.)

Otherwise most alternative lenders will loan to you and at 600 you could get a pretty high percentage of the sales price. Most likely 95% but I know it used to be possible to do at 100%. So if you have some money down, you'll be in great shape.

Also keep in mind the closer to 100% that you get the higher your rate is going to be. So it can benefit you a great deal to have some down payment funds.

drb419 · Joined: 31 May 2005 Posts: 7

Thanks for sharing your knowledge.
Paying 5% down will not be a problem, I feel much more confident about applying for a loan now...thanks again.

BECCA9892003 · Joined: 20 Jan 2005 Posts: 400 Location: Altoona, PA

you actually have a great chance of getting a loan even one day out of bankruptcy....one thing though you will need to do is obtain at least two trade lines (credit cards)...you are still able to get 100% financeing but one thing they will look for is that you established some sort of new credit..two credit cards that give you a $300 limit and do report to your credit our orchard bank and capital one....they wont report postively on your credit though for 6 months and one day.......

there is hope so don't give up!!!!

drb419 · Joined: 31 May 2005 Posts: 7

Thanks for taking the time to answer my questions. Until I found this forum, I had a hard time getting answers to any of my questions. It's great that professionals like yourself and Mr. Halwachs are willing to share your expertise.
I hope you don't mind a couple more questions.....Is it possible for me to get a home loan if I don't have a couple of credit cards, or is that absolutely necessary?
Much of my debt discharged through bankruptcy was credit card debt, so I doubt if I can get an unsecured card. I've looked into secured cards, and the upfront fees are just outrageous. If I send $300 for a secured card, they will normally take $200-$250 in fees. Then when they report to the credit bureaus, it looks like I've almost maxed out the card already which isn't going to help my credit score.
Are there any banks or companies you know of that offer secured cards without the high fees? My bank (Wells Fargo) offers a secured card, but only if you haven't been through bankruptcy in the past year.
Thank you...Sam

BECCA9892003 · Joined: 20 Jan 2005 Posts: 400 Location: Altoona, PA

www.orchardbank.com and www.capitalone.com .....both have upfront fees but they are alot more reasonable to deal with..the idea is to keep a balance on them of no more then 45% of your allowable credit limit..which will be $300.....trust me on this one..it is worth the fees to get your score to turn around the other option is if you have a close friend or relative...have them make you a authorized user on 1-2 of there cards..they dont have to give you a card and you dont have to use it....but next month when the cards report they will also report to your credit showing that you now have had a credit card for maybe a few years with a good history on it...this is a very short term fix..so if you are able to do it then be prepared to move on your mortgage very quickley after that.....once you obtain your house you can have them remove your name off their cards...one thing to make sure of is when they call to do this make sure they ask for your date of birth and your social security number or else it wont report to your credit..keep your chin up....it will all work out fine....if you have any further questions on this im not sure what area you are in but we do bi-monthly credit repair seminars with a leading expert in the field or you may call me at my office with further questions...
814-946-9612.....

Haplo · Joined: 20 Jan 2005 Posts: 2422 Location: Springfield, IL

Gah! Don't call me Mr. Halwachs! It makes me feel awkward and ... old! I'm not nearly as old as I look fortunately (or unfortunately?)

What state are you in? You probably noticed that I'm with the mortgage division of your bank and I'd be happy to talk over your scenario with you as well. My office # is 800-420-0053 x122.

If you do happen to be around Becca though I highly recommend one of her credit repair Sem's. Even though she never got me that DVD she promised me she is very knowledgeable and helpful ;)

BECCA9892003 · Joined: 20 Jan 2005 Posts: 400 Location: Altoona, PA

i will still get you copies i promise..but i was alittle ticked for a bit ...i think you know why.........lol

drb419 · Joined: 31 May 2005 Posts: 7

Becca and Travis,
I live in central Iowa, about 50 miles from Des Moines.
I'm going ask a good friend of mine if he will make me an authorized user on his credit card. If that doesn't work out, then I'll go ahead and pay the fees to get a secured card or two.
Thanks to both of you for your help, and for your encouragement....Sam

Haplo · Joined: 20 Jan 2005 Posts: 2422 Location: Springfield, IL

I do understand why, and trust me you weren't the only one ;) I was equally as upset about that whole scenario!!

I just closed a loan over in Redfield last week. They certainly do things different over there ;)

Hey Bec, with Cap one and orchard, you said something about 6 months and 1 day. Is that that they report badly after those 6 months or that they report badly up until that 6 months mark?