Posted on: 20th Feb, 2010 03:47 pm
we went through a chapter 7 bankruptcy that was discharged in 2007. we are still living in and have been making payments on the home whose mortgage was discharged however i recently lost my job and we can no longer afford the payments on this home. is it possible to obtain a new mortgage for a smaller, cheaper home whose payments we could afford and then let our current home go into foreclosure? and what ramifications would we be faced with?i should also add my husband still is working and has steady income that could be used toward qualifying for new mortgage it was only my income that was lost.
Welcome lovable_esa,
You won't be able to qualify for a conventional loan prior to 4 years of a bankruptcy discharge. However, you would be able to get a FHA loan as 2 years have already passed since your bankruptcy got discharged. If you haven't reaffirmed your mortgage in chapter 7, then you can let the property go into foreclosure. If the property is foreclosed upon, then it will get reported to your credit report. Thus, after a foreclosure, you won't be able to get a home loan immediately.
You won't be able to qualify for a conventional loan prior to 4 years of a bankruptcy discharge. However, you would be able to get a FHA loan as 2 years have already passed since your bankruptcy got discharged. If you haven't reaffirmed your mortgage in chapter 7, then you can let the property go into foreclosure. If the property is foreclosed upon, then it will get reported to your credit report. Thus, after a foreclosure, you won't be able to get a home loan immediately.
So if I'm understanding you correctly we could currently qualify for a FHA loan while the house isn't in foreclosure if we meet other criteria but if we wait to the point of not being able to make the payments and the house goes into foreclosure we wouldn't be able to qualify without letting several more years pass. So since we did not sign a reaffirmation and are on the verge of going under we should apply for FHA loan for cheaper house and mortgage now then let house go into foreclosure which unfortunately will negatively affect our credit again!
lovable_esa
lovable_esa
Hi lovable_esa,
It is true that you may be able to get a FHA loan as your bankruptcy has been discharged for more than 2 years. However, if the present property is foreclosed upon, then it would definitely have a negative affect on your credit.
Thanks
It is true that you may be able to get a FHA loan as your bankruptcy has been discharged for more than 2 years. However, if the present property is foreclosed upon, then it would definitely have a negative affect on your credit.
Thanks