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FHA loan after Chapter 13 dismissal

Posted on: 13th Nov, 2007 02:46 pm
hello, i was a home owner for 11 years, and like others, ran into some financial problems. i decided to enter a chapter 13 bankruptcy. about 2 years into that plan, i decided to dismiss the chapter 13, sell my house, rent for a year, then try to re-purchase another home.
my question is, on a fha mortgage, is there a waiting time, to get approval?
any help would be great. thanks
Hi Fozman68,

If you hadn't had the Ch 13 dismissed the credit clock would've started ticking from the time you filed the Ch 13...but since you had it dismissed, the clock started at the date you dismissed it.

To purchase a home with a FHA mortgage, you need to have 2 clean years of credit after the bankruptcy discharges, or in this case the date of dismissal.

Be sure to pay your rent on time, make sure you pay with a check or money order, so you can document it. Be sure to reestablish you other credit and definitely be sure to make all payments on time and not let anything go to collection.

After a bankruptcy, lenders will take a much harsher look at any lates or collections.

Hope this helps...for more tips, check out my blog...
Posted on: 13th Nov, 2007 05:55 pm
Hey Fozman68,

THat was me who answered you...but I forgot I wasn't logged in...sorry,

Posted on: 13th Nov, 2007 06:44 pm
I heard that an FHA loan could also be obtained while you are still in bankruptcy Ch 13, if no derogatory credit has been recorded in the past 12 months. Is that true?
Posted on: 14th Nov, 2007 01:35 am
Hello Fozman,

Even I agree with Kim. To get the approval for an FHA mortgage, you will have to wait for 2 years after the bankruptcy has been discharged.
Posted on: 14th Nov, 2007 01:53 am
Hi Fozman,

Welcome to this forum.

Kim is very right. To qualify for FHA mortgage, you must have 2 years of clean credit history. Make all the debt payments on time and try to improve your credit report. Bankruptcy has a huge affect on your credit report. So even if you make all the payments on time, it needs at least 2 years to come over from that affect.

Feel free to ask if you have any further questions.

Posted on: 14th Nov, 2007 02:03 am
Since I can't get a FHA, are there still sub-prime mortgages available?
I've worked on my I raised it from 495 to 648 (middle scores), in 11 months. I also plan on putting 20% down. What are my best options? I really don't want to rent another year.
thanks again.
Posted on: 14th Nov, 2007 06:34 am
"I heard that an FHA loan could also be obtained while you are still in bankruptcy Ch 13, if no derogatory credit has been recorded in the past 12 months. Is that true?"

Yes it is true, if you can get the court to agree to allow you to, and you have made at least 12 months of payments.

The general rule is this for Ch 7 BK's you have to wait 2 years. Ch 13 is 1 year from discharge date.

Hope this helps.
Posted on: 14th Nov, 2007 08:08 am
Hello Fozman,

As Eric has already stated that you may still qualify for an FHA mortgage if the court allows you and if you have on-time payments for the last 12 months.

I suppose you have been regular with payments in the last 1 year and with a 648 score, I think you may try for the FHA mortgage.
Posted on: 14th Nov, 2007 11:43 pm
yeah definately check out FHA b4 going subprime rout will save you lots of $$$ and at the worst you will get a no.
Posted on: 15th Nov, 2007 05:58 am
FHA Mortgage Loans is 1 yr for chapter 13...and 2yrs for chapter 7 or foreclosures.

This is stated in their guidelines.

You can have a 400 credit score...but you cant have any credit lates in the last 12months. Medical debt maybe overlooked.

Make sure to find a FHA lender who does 'manual underwrite' if you have a low score. There arent many FHA lenders that do manual underwrite

edited per forum rules
Posted on: 15th Nov, 2007 10:33 am
Well, just got word from my broker, says found 2 different offers for me, and one was a FHA Loan.
Just asked to have any balances over $250.00 on my c.rep. paid off.
did also say that the interest rate would be around 9%, but that the refi, on FHA, is easy.
thanks for everyones help.
fyi- company I'm working with is Eagle Natiionwide Mortgage.
Posted on: 15th Nov, 2007 10:58 am
with FHA you shouldnt get a rate higher than 7.25% for a 30yr fixed!!
Posted on: 15th Nov, 2007 11:00 am
why are they already talking about a refi?

be vary careful if they are giving you the line..."this is only temporary or a band-aid loan". if they are trying to do a subprime 2/28 or 3/27 loan and then refinance you to fha in 1-2 years, be careful. this is a prime reason a lot of folks are going to foreclosure right now. what happens if you can't refinance? your payment will go through the roof as you will be getting an adjustable rate. now if they give you fixed rate, make sure it is not a 30 year loan due in 15 years. or any other type of balloon loan.

let me know if you have any questions.
Posted on: 16th Nov, 2007 10:24 am
Just to clarify, I was told that I could get approved for a FHA Loan, as long as I clear up my credit report, (not including medical).
Says there are 3 to clear up. Now 2 of these are over 6 years old, is this part normal? Anyway, my plan is this....
Instead of putting 10-20% down, pay off these old debts, get approved for FHA, put 3-5% down, and invest the rest somehow.
Any other input would be great, but let me thank everyone one more time.
Posted on: 19th Nov, 2007 11:15 am
Fozman...the statement from your lender can be true for them...and it maybe false for others.

Most lenders who are FHA approved don't offer 'manual underwrite', and may not offer FHA loans to borrowers with scores less than 550.
If this is the case..then the broker/lender is trying to bring up your credit score to where it needs to be per their guidelines.

FHA's guidelines state that you may not have any credit lates in the last 12months.....or will need a good letter of explanation.
No foreclosures within chapter 7 within 2yrs...and no chapter 13 within 1yr.

You would need to show at least 3tradelines that are positive within the last 12months. (some lenders may say less).

I'm a mortgage broker and work with over 440 lenders.
Not all of them offer FHA....and not all offer manual underwrite.
I probably only know of 1-2 that actuall go less than 500 credit scores.
FHA has no credit score requirement...but that doesnt mean the lender wont.

So it may be true with his lender....but you may shop around...and see that it may be done with another lender with the same rates.
Posted on: 19th Nov, 2007 03:14 pm
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