Mortgage Post BK13

[outtaBK13]

Hello, 

We are looking to apply for a mortgage to buy a  house. Here are our details:

Me: Chapter 13 discharged 7 months ago. Cedit score roughly 700+/_ a few across the big 3. No negatives at all other than the BK public record. 

Wife: 800 ish score. No BK, No negatives at all (she was not on the BK with me). Only negative would be age of accounts since her oldest account is maybe 2 years old. 

We have zero debt at this point and are living in an apartment while we look for a house.

We sold our home last fall and have $450k cash in the bank. We will probably be looking for $200k mortgage to bridge the gap of the home we want to buy. (will put the $450k down on the house). 

Our last mortgage was paid in full and was never late (was not included in the ch13, we kept paying the full amount without any issue until we paid it off when we sold). That mortgage was with Navy Federal (NFCU). 

Biggest question I have is.. I did have a credit account with NFCU that was included in the BK (credit caard) that was part of the discharge, so basically they did not get the full payoff of that account. Should we bother appying with NFCU for the new mortgage? Would that be a waste of a pull with them seeing that they "got burned" on the credit card? 

Any other advice for us in this situation?

Thanks!

[JoeRockhead]

The overall experience people have had with NFCU after burning them is that they won't extend any more credit to you unless they are made whole again. Maybe someone else will chime in with a different experience.

[ShanetheMortgageMan]

Not sure what NFCU's BK seasoning requirements are, but if they follow Fannie Mae guidelines then you'll need to wait 2 years after the Ch 13 BK discharge in order to be eligible.  Freddie Mac loan programs can allow financing without any waiting period after a Ch 13 BK discharge, but you must pass automated underwriting which can be difficult to do but a large down payment can help.  FHA financing (which NFCU doesn't offer) and VA financing (which NFCU does offer) both would allow you to qualify without having to wait the 2 years though.

[outtaBK13]

Thanks for the replies!

Does it make any difference that my wife does not have the BK on her report? I don't think she can qualify on her own due to lower income. Also, I was hoping since we have 450k to put down on a 550-600k house they might be a little more leniant with us. 

So, it sounds like the easienst path is to go with an FHA loan so I probably won't waste my time with NFCU then. 

[Horseshoez]

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@outtaBK13 wrote:

Hello, 

We are looking to apply for a mortgage to buy a  house. Here are our details:

Me: Chapter 13 discharged 7 months ago. Cedit score roughly 700+/_ a few across the big 3. No negatives at all other than the BK public record. 

---

I'm curious, where are you getting your credit scores from?  I ask because having FICO scores in the 700s seems a bit high for someone with a newly discharged Chapter 13.

Regarding your question about NFCU, I believe that is a non-starter unless you plan on making them whole first.  How much did you burn them for?

[ShanetheMortgageMan]

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@outtaBK13 wrote:

Thanks for the replies!

Does it make any difference that my wife does not have the BK on her report? I don't think she can qualify on her own due to lower income. Also, I was hoping since we have 450k to put down on a 550-600k house they might be a little more leniant with us. 

So, it sounds like the easienst path is to go with an FHA loan so I probably won't waste my time with NFCU then. 

---

If your wife wasn't included in the BK (it being on her credit report or not doesn't matter) then she wouldn't be bound to any post-BK waiting period requirements, but her income would need to qualify on its own if you aren't going to be on the loan.  She could also get a co-signer (without a BK) to help with more income, but then you deal with the complexities of someone else being on the hook for her debt. 

Since you have a large down payment I'd talk with a lender who offers Freddie Mac loan programs since there is a possibility you could get approved, as you'll have to pay mortgage insurance on an FHA loan but won't with Freddie Mac.