Is it at all possible to obtain a mortgage after a Ch. 7 bankruptcy which included a home?

Asked by Jba, High Point, NC Thu Jun 4, 2009

My wife and I were discharged in March of 2008 from a Ch. 7 bankruptcy that included a previous mortgage. We moved to High Point last year due to my getting a much higher paying job, and we have been renting a home for $1500 a month, but the owner needs to break the lease and sell.

Besides a car loan, we have no debt. Income is approx. 120,000, though some is 1099 type of income. Roughly 110,000 is verifiable, stable income (salary and pension.) FICO scores just under 700. As I mentioned, the home was included in the BK, so there is no formal foreclosure in the public records section.

We are 15 months after discharge, and we desperately want to stay in the Southwest Schools district. We are considering some form of lease-to-own, but we're having a hard time finding what we want: 4 bedrooms, newer. We'd really like to buy new in the neighborhood we're in. So I'm just wondering is there any possibility at all of getting a mortgage? Thanks for any information!

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Len Montgomery’s answer
Len Montgome…, Agent, High Point, NC
Thu Jun 4, 2009
Hi Jba,

I believe all the info you have received thus far is fairly accurate as to the possibility of obtaining a mortgage under typical circumstances. There may an greater opportunity to obtain financing now if you were looking at a lower LTV (Loan to Value) mortgage, maybe 70-80%. This could be accomplished with a sizable down payment if that is a possibility for you at this point. Another possibility is a seller second mortgage if the primary would allow it. I live right near Southwest schools and I believe there are some homes nearby that would consider creative financing options. If I can help or recommend a mortgage person, please let me know.

Len Montgomery
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Larry Story, Agent, Greensboro, NC
Thu Jun 4, 2009
First Jason is correct it usually is 18 to 24 months after the "discharge date" of a bankruptcy.

One thing I would caution you on is giving too much information on your financial situation. By doing this you are harming your negotiating position. For instance say if Jason represented you as a client and you wanted to buy one of my listings I now know about how much you can afford. That hurts your negotiating position.

Your first move would be to contact a lender and start that process. Even in a lease/purchase option they will want to know how long before you can move forward and buy.

My recommendation is to contact a lender and a buyer's agent. You can then start this process the correct way with people working for you and supporting you.

Hope this helps,
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Jason Ewing, Agent, High Point, NC
Thu Jun 4, 2009

Typically you are looking at about 18-24 months after discharge until you can obtain financing. I would be more than happy to put you in touch with a couple of lenders that would be abe to give you a difinitive answer. If you can not obtain financing yet, there are homes available that offer a lease option. What neigborhood are you in now? I have placed a few buyers in the last year in lease to own homes, so I am familiar with the process. Please feel free to contact me if I can be of any service to you.

Jason Ewing, GRI/CNS
Coldwell Banker Triad, Realtors
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