100% financing - any time after discharge with 3 good tradelines + 2 years history

Has anyone been able to buy a house SOON after Bk.7 discharge? I'd be really interested in hearing how soon, as well as information on your lender and terms - down payment, interest, etc. Thanks.

There is a great book called "Yes, You Can Get A Mortgage" and addresses the concerns of those who have had bankruptcy and other credit problems. It has been a great encouragement to me and lets me know that there is hope of getting another home again.

The author is Brian I. Sacks. First check your library and see if there is a copy. If not, I would recommend buying it, and look at the purchase price as an investment in the future. He even provides a list of groups that will help with gifts towards a downpayment and/or closing costs.


If you do the leg work he suggests, it will make the application process less scary and speed things up. Good Luck whatever you do. You can make it happen, it justs takes more work on your part and a good amount of patience. Probably best to wait 2 years, although you can do it sooner but will pay higher rates if you can get someone to give you a mortgage. Also, the higher $ you can put down for a downpayment (hopefully minimum 20%) the more likely you can speed homeownership up.

And don't forget FHA, which entails a 2 yr. wait but has very lenient requirements.

My chapter 7 was discharged 3/10/03 in Texas. I just bought a $175,000 house with 100% financing. It is an 80/20 with the 80 rate at 6 3/8% and the 20 at 11 1/2%. I got the seller to pay all closing except my prepaids. As far as I know this is the only company that does this. The rules are a less than 50% debt to income, and at least 3 tradelines that are good in the last 3 years. The company is First Franklin, they have a website but you have to have a mortgage broker. I found a broker that would do it for me for 1% origination. I hope this helps. Everyone I have told about this that knows about my recent bk can't believe it.

I know this sounds dumb, but please explain your 80/20 ratio. You mean you will pay the lower rate for a time and then the higher? Or are you referring to the percentage of the mortgage? If so, the 11 1/2 seems high, unless you can refinance before that rate kicked in.

How did you manage to find such a good broker? At this point, after being so traumatized from shady lawyers to outright crooked real estate agents, I find it hard to trust anyone.

Our discharge was 4/29/03 and the case marked "closed" last week.
Thanks in advance.

Glad to hear that you did it! I'm hoping to buy in the next 6 mos. My BK discharged 1/28/03

"Or are you referring to the percentage of the mortgage?"

Almost - it's the percentage of the sales price.

" If so, the 11 1/2 seems high, unless you can refinance before that rate kicked in."

I think it's unbelievably LOW! I sure wouldn't take that risk on 100% financing right after discharge.

How about paying it OFF instead of refinancing?

I can hardly believe this type of financing exists, thanks for sharing.

I'm actually not generally in favor of any type of 100% financing. I think people should learn how to SAVE before they buy a house. Owning a house comes with BILLS for repairs and maintenance.

Losthearts, the 80/20 works as follows:

80% of the purchase price amount is financed at 6 3/8% and 20% of the mortgage amount is financed at 11 1/2% - both over 30 years. I completely understand you being a little cautious so here is the info that is at the site. (http://www.first-franklin.com/)

When I first heard about it the broker I was talking to wanted 3% origination, but I shopped around and finally found a broker who would do it for 1% (that is 1% of the first mortgage amount - example $150,000 purchase price X 80% X 1% = $1,200 origination fee)

The 11 1/2% sounds high, but when you are only talking 20% of the loan amount, it does not really make a huge difference in your monthly payment, plus you can pay it down as quick as you like. I wish you the best of luck, as I was very depressed about the thought of not being able to purchase a home for quite a while after discharge. (I kept hearing a minimum of two years or I needed to put down 20%) I think this is a great way to truly start building a good credit history as soon as you can after discharge, and not for a lot of cash up front. Here are the details:

Guidelines for obtaining a 100% Financing loan:

Credit score of 600 or higher on two of three credit reports, otherwise you must put down 5%
You are eligible the day after your bankruptcy discharge
Up to 55% debt + housing-to-income ratio
First-time homebuyers allowed at a maximum debt ratio of 50%
Maximum loan amounts up to $875,000
100% financing available on single-family residences, planned unit developments, duplexes (2 units), and condos
3 lines of traditionally rated credit and a 2-year credit history
6% seller-paid non-recurring closing costs allowed
Not offered in Alaska or Hawaii

Here's the direct link:

http://www.first-franklin.com/products/financing.html

Really incredible!

Thanks again, that's what I call a contribution.

Christine, email me at the email address I have on file, we need to talk, if you think that was good. I have lots more, BK is not what it used to be!

Thanks to you both for explaining how this works.

Christine, you are right, the 11 1/2 is low, now that I understand how it works.

Here's what we were paying:

1st Mortgage: $75,000 at 9.9%
2nd Mortgage $42000 at 14.5%
Worth of House: $90,000

Of course the regular rates were a bit higher when we received this loan a few years ago, but we did not deserve the rates they gave us back then. I have just requested copies of all the loan papers (ours was lost in a flood a few years back-folks, please buy a waterproof safe!). Research, research, research!

The reason we switched from Chapt. 13 to Chap. 7 was because it was the ONLY way we could get rid of those horrid mortgage loans. They really took advantage of our ignorance. This was back in 1998, a time when predatory lending was a term that hardly existed. There was not the current high level of awareness of both predatory lenders, federal regulations and the importance of pulling credit reports (think I told you we found over $30000 in errors).

The fact that there are programs out there if one does enough research is very encouraging. Thank you for posting and helping all of us understand there is hope.

Some lessons in life come harder then others. The important issue is to learn from past mistakes.

I gotta tell you all, we bought a house only one year and 3 months after our discharge date. We had to put only 5% down, and our rate is a fixed 8.5%. We went to Steven Snyder's seminar here in Massachusetts, and bought his book "Credit After Bankruptcy". In the book, CTX MORTGAGE company out of Dallas, Texas was suggested as an excellent resource for post-bankruptcy mortgages. We applied, qualified for up to a $150,000 mortgage, and went house shopping!!!!! We have been living in our home for a year and a half now, and could not be happier. We are in the process now of refinancing, and should get down to a 6.5 rate, which we feel is excellent. Also, we just bought a new Ford Windstar, sticker price of $34,000, with $5,000 cash down, plus trade, and rebates. Got 10.5% thru Ford Motor Credit. Our scores are 650 for me, and for my hubby, 680. Here is the key to what we believe was our success. We kept my hubby's car loan, which had a year left. I kept one credit card, and so did he. We included our former home in bankruptcy, and rented a home. BEFORE we filed for BK, we opened up new checking accounts, telephone, and electric accounts. After we were moved into the rental, we filed. At least this way we had some credit and checking/savings as solid credit resources. Hope this info helps anyone who feels BK is the end of the road. We also felt it was important to TALK with our mortgage broker at CTX and explain our plight to BK. Our situation was definitely very hard, plausible, and absolutely making us ill. BK did give us a fresh start, and we have learned much from our mistakes. Good luck to all.

I am confused regarding home purchases after ch7 bk. I read here alot about scores with regards to rates. Then I read that FHA does not look at scores as long as you have maintained a positive 2 year history of credit. I know about the insurance premium you have to pay for FHA, but is this monthly amount more than the interest you would have to pay for a "conventional" loan this soon after BK? Are there other costs or downpayment considerations that need to be considered.

I will be out of ch7 2 years in August and would like to purchase a home. All of my credit reports are showing only current histories since then however, my score was 566 on equifax and 671 on a transunion report I received after a dispute. Can someone give me some advice as to the best route to go? I have saved a few thousand for a downpayment and can't afford to make a mistake. Any thoughts would be appreciated...

"566 on equifax "

Assuming that's the Beacon score (not PrivacyGuard), there's definitely problems with your Equifax. You should get fixed whatever is causing that low score, even if you don't need scores for the mortgage.

Then you should find a mortgage broker to explain to you the various options. When I brokered, FHA was about 1/2% higher than conventional rates. You also have mortgage insurance for a conventional loan with a high LTV%.

And have a look at NACA.com:

"Below Market Interest rate:
4.750% 30-year fixed (as of 05/30/ 03)"

That was the privacyguard score. Is this score correct? They say it is the beacon score. Is the Equifax score higher or lower if it is not correct?

"They say it is the beacon score."

Are you sure? I just checked again, here's what I get:

"This Credit Score is based on information from your Equifax credit report."

and

"Thanks to your high CreditXpert Credit Score(tm), ..."

Please let me know if you're getting the Beacon.

And, have a look at Credit scoring basics (http://creditforum.org/showthread.php?s=&threadid=1248)

hello cleardebt, we are also interested in obtaining a mortgage to purchase a home. Can you give any more details about your experience with First Franklin. I did check their website, and the program sounds great. Did your broker do everything via fax since they are based out of California.

thanks for your story.



Originally posted by cleardebt
My chapter 7 was discharged 3/10/03 in Texas. I just bought a $175,000 house with 100% financing. It is an 80/20 with the 80 rate at 6 3/8% and the 20 at 11 1/2%. I got the seller to pay all closing except my prepaids. As far as I know this is the only company that does this. The rules are a less than 50% debt to income, and at least 3 tradelines that are good in the last 3 years. The company is First Franklin, they have a website but you have to have a mortgage broker. I found a broker that would do it for me for 1% origination. I hope this helps. Everyone I have told about this that knows about my recent bk can't believe it.

I'm trying to understand this. When it says "Three lines of traditionally rated credit and a two-year credit history". How does this work if you've just completed bankruptcy with those 3 lines of credit......... or does this mean that you have to have 3 new lines of credit? As you can probably tell, I'm new at understanding the credit and mortgage terminology.

Thanks,
Amy

Amy, I'm not sure what you're asking, and this forum is closed to new questions because I'm busy with my law suit.

Please see the Announcement: http://www.creditforum.org/announcement.php?s=&forumid=19