Looking for opinions...

Hello all,

I'm 25yrs old, my wife is 24yrs... due to severe medical expenses, and some
stupid college behavior we ran up huge amounts of debt.

in March 2003 we filed for chapter 7 bankruptcy... (weather or not you
agree with the decision, it was one of the hardest decisions I've ever had
to make... and I truly believe it was the best option for us at the time,
given neither one of us had jobs)

now about 3 years later, we have both graduated college, moved, and both
gotten jobs... we haven't touched a credit card since, we rent, I have a
years worth of rent set up in a savings account and withdraw once monthly
(which was how we were able to get approved for the appartment), a car which
we is fully paid for. And no debt, asside from student loans.

I have accumulated about 25K in a savings account (this is separate from the
rent money) and I think we are ready to buy our first home...

my question to you is how should I go about getting approved for a
mortgage... I recently looked at my credit report and score and the
bankruptcy is definately present my score was about 580, and my wifes was
565. obviously I need to look for a lender with higher than average interest
rates and caters to poor credit individuals, but how do I keep from being
taken for a ride? and how do I know if the agent is giving me a good deal...
the median home price in my area is around 375-425K (clearly the 25K I have
saved isn't enough, but we have family willing to help us reach 10-15%
downpayment if necessary)

Thank you all for your thoughts,
Shhhh

Re: Looking for opinions...

In article <>
wrote:

> in March 2003 we filed for chapter 7 bankruptcy... (weather or not you
> agree with the decision, it was one of the hardest decisions I've ever had
> to make... and I truly believe it was the best option for us at the time,
> given neither one of us had jobs)

> my question to you is how should I go about getting approved for a
> mortgage... I recently looked at my credit report and score and the
> bankruptcy is definately present my score was about 580, and my wifes was
> 565. obviously I need to look for a lender with higher than average interest
> rates and caters to poor credit individuals, but how do I keep from being
> taken for a ride? and how do I know if the agent is giving me a good deal...
> the median home price in my area is around 375-425K (clearly the 25K I have
> saved isn't enough, but we have family willing to help us reach 10-15%
> downpayment if necessary)

First off, anyone who has filed bankruptcy less than 3 years ago
and is now thinking of buying a half-million dollar house should
instead be thinking about repaying some of the people that they
screwed in the bankruptcy. Clearly you had the ability to pay
off some of these creditors if you have that kind of wealth only
a few years later. That behavior is all but criminal. No wonder
the Republicans want to tighten up bankruptcy laws.

To answer you question, you need to look around for a lender
that loans money based on manual underwriting, and not one
that simply decides based on FICO score. They are out there,
but they are less common. Once you find one, then you want to
go in and get "pre approved". That will tell you what types
of loans you might qualify for, and what price range you should
be looking in.

Note that a $400,000 house is going to carry some pretty hefty
payments, especially when you go in with almost no savings and
no assets. You should have a good 25% or so saved up in order
to qualify for a better loan and to avoid being upside down
with this beast. You also should expect to have an income in
the $140K or more range just to make payments and taxes on
this behemoth.

What ever happened to the concept of a young couple buying
a starter house, and then moving up later on when they could
afford it? I guess that is how one ends up bankrupt within
3 years of taking their training wheels off an becoming an
adult.

-john-

--
============================================================ ==========
John A. Weeks III 952-432-2708
Newave Communications
============================================================ ==========

Re: Looking for opinions...

"John A. Weeks III" <> wrote
> Note that a $400,000 house is going to carry some pretty hefty
> payments, especially when you go in with almost no savings and
> no assets.

Right. For example, the property taxes on this house are essentially going
to be money thrown away. To the OP: Why do you want a house? There is
evidence to indicate an apartment living is much less expensive, even for
the long-term, even for about the same amount of living space.

It would be easy to play "good cop" here to John's "bad cop" comments, but
that would be dishonest. I agree with the thrust of everything else John
says, with one caveat: Severe medical expenses are said to be bankrupting a
lot of families--even families with good health insurance plans--these days.
Recently I quoted a report on this in the New York Times. So I think there
may be mitigating circumstances here that may be due more to bad luck than
irresponsible choices.

So to the OP, I know you simply want to know how to go about getting a
mortgage without being taken for a ride, but I think you're asking the
impossible and unreasonable on a few levels.

Keep saving. Good for you for apparently getting back on track.

Re: Looking for opinions...

In article <RQoHf.17285$>,
"Elle" <> wrote:

> It would be easy to play "good cop" here to John's "bad cop" comments, but
> that would be dishonest. I agree with the thrust of everything else John
> says, with one caveat: Severe medical expenses are said to be bankrupting a
> lot of families--even families with good health insurance plans--these days.
> Recently I quoted a report on this in the New York Times. So I think there
> may be mitigating circumstances here that may be due more to bad luck than
> irresponsible choices.

OK, I can understand a medical issue wiping someone out. I myself
am uninsurable due to a birth defect. The only time I can get health
coverage is when I work as an employee where they have a group plan.

So lets say we have a young couple that is 3 years out from being
wiped out by a medical problem. At this point in their life, I
would think that they would want to save up a good buffer to help
pay for such a thing if it happens again. Medical problems are
rarely a one time event. If they get mortgaged up to the limit,
and they get sick again, there goes the house and all their equity.

Yes, it kind of sucks that they were not born with the wealth of
the Kennedy family, and it is unfortunate that they have these
medical issues. But in life, you have to play with the cards that
you are dealt with. In this case, they are going to have to
consider giving up the dream of a starter castle and focus on
building a strong financial platform so they can survive the
next medical disaster. A disaster that they likely know is coming.

-john-

--
============================================================ ==========
John A. Weeks III 952-432-2708
Newave Communications
============================================================ ==========

Re: Looking for opinions...

John,

Just so you know........

- Manual underwriting went the way of the dinosaurs.
- There are plenty of subprime lenders in this country.
- 99% of all mortgage lenders consider FICO scores in their
determination of borrower worthiness. (FHA and VA are more liberal on
this front, but that is it)
- Your stated income requirements are on the high side (particularly if
the OP goes with a FHA loan)

Regards,

Scott Miller
Commercial and Residential Lender/Broker

www.RealEstate-IQ.com
www.EZMortgageLoanz.com

John A. Weeks III wrote:
> In article <>
> wrote:
>
> > in March 2003 we filed for chapter 7 bankruptcy... (weather or not you
> > agree with the decision, it was one of the hardest decisions I've ever had
> > to make... and I truly believe it was the best option for us at the time,
> > given neither one of us had jobs)
>
> > my question to you is how should I go about getting approved for a
> > mortgage... I recently looked at my credit report and score and the
> > bankruptcy is definately present my score was about 580, and my wifes was
> > 565. obviously I need to look for a lender with higher than average interest
> > rates and caters to poor credit individuals, but how do I keep from being
> > taken for a ride? and how do I know if the agent is giving me a good deal...
> > the median home price in my area is around 375-425K (clearly the 25K I have
> > saved isn't enough, but we have family willing to help us reach 10-15%
> > downpayment if necessary)
>
> First off, anyone who has filed bankruptcy less than 3 years ago
> and is now thinking of buying a half-million dollar house should
> instead be thinking about repaying some of the people that they
> screwed in the bankruptcy. Clearly you had the ability to pay
> off some of these creditors if you have that kind of wealth only
> a few years later. That behavior is all but criminal. No wonder
> the Republicans want to tighten up bankruptcy laws.
>
> To answer you question, you need to look around for a lender
> that loans money based on manual underwriting, and not one
> that simply decides based on FICO score. They are out there,
> but they are less common. Once you find one, then you want to
> go in and get "pre approved". That will tell you what types
> of loans you might qualify for, and what price range you should
> be looking in.
>
> Note that a $400,000 house is going to carry some pretty hefty
> payments, especially when you go in with almost no savings and
> no assets. You should have a good 25% or so saved up in order
> to qualify for a better loan and to avoid being upside down
> with this beast. You also should expect to have an income in
> the $140K or more range just to make payments and taxes on
> this behemoth.
>
> What ever happened to the concept of a young couple buying
> a starter house, and then moving up later on when they could
> afford it? I guess that is how one ends up bankrupt within
> 3 years of taking their training wheels off an becoming an
> adult.
>
> -john-
>
> --
> ============================================================ ==========
> John A. Weeks III 952-432-2708
> Newave Communications
> ============================================================ ==========

Re: Looking for opinions...

I'll leave the morality of your bankruptcy to others to debate and will
focus my effort on addressing your questions pertaining to securing a
competitive loan in the absense of a good FICO score.

There are several lenders that would lend based upon the realities you
have provided, but as you have already noted, the rates are higher then
if you had a unblemished past.

How do you ensure that you are getting a good deal? Comparison shop
and negiotate.

One financing option that would allow you to avoid a subprime (lenders
to the credit challenged) lender is to consider using a FHA loan. FHA
loans are not credit sensitive, cap what lenders can earn/charge on
lending fees, allow for a min. down payment of 2.75% of property value
and the rates are usually only .125~.25 higher then if conventional
lender's rates (Your local Bank of America branch).

>From an income qualification standpoint, you (and your spouse) would
need to have a combined household income in the low six figures to
afford a house in the price ranges you have referenced.

Good luck.

Regards,

Scott Miller
Commercial and Residential Lender/Broker

www.RealEstate-IQ.com
www.EZMortgageLoanz.com

Shhhh wrote:
> Hello all,
>
> I'm 25yrs old, my wife is 24yrs... due to severe medical expenses, and some
> stupid college behavior we ran up huge amounts of debt.
>
> in March 2003 we filed for chapter 7 bankruptcy... (weather or not you
> agree with the decision, it was one of the hardest decisions I've ever had
> to make... and I truly believe it was the best option for us at the time,
> given neither one of us had jobs)
>
> now about 3 years later, we have both graduated college, moved, and both
> gotten jobs... we haven't touched a credit card since, we rent, I have a
> years worth of rent set up in a savings account and withdraw once monthly
> (which was how we were able to get approved for the appartment), a car which
> we is fully paid for. And no debt, asside from student loans.
>
> I have accumulated about 25K in a savings account (this is separate from the
> rent money) and I think we are ready to buy our first home...
>
> my question to you is how should I go about getting approved for a
> mortgage... I recently looked at my credit report and score and the
> bankruptcy is definately present my score was about 580, and my wifes was
> 565. obviously I need to look for a lender with higher than average interest
> rates and caters to poor credit individuals, but how do I keep from being
> taken for a ride? and how do I know if the agent is giving me a good deal...
> the median home price in my area is around 375-425K (clearly the 25K I have
> saved isn't enough, but we have family willing to help us reach 10-15%
> downpayment if necessary)
>
> Thank you all for your thoughts,
> Shhhh

Re: Looking for opinions...

In article <>,
"$cott" <> wrote:

> John,
>
> Just so you know........
>
> - Manual underwriting went the way of the dinosaurs.

Well, there is at least on major one here in the Twin Cities,
and I know of another major one that advertises nationally.
The big thing is that you want someone who will listen to your
story rather than just plug numbers into a computer program.

> - There are plenty of subprime lenders in this country.

Their are plenty of mass murderers, too. I wouldn't let either
one get within a mile of my checking account. Most of the time,
you hear about sub-prime lenders in context of investigations by
the attorneys general or in out-of-court settlements. Who was
the latest one...Ameriquest?

> - 99% of all mortgage lenders consider FICO scores in their
> determination of borrower worthiness. (FHA and VA are more liberal on
> this front, but that is it)

Then this person needs to find that 1% who are not going to rip
her off.

> - Your stated income requirements are on the high side (particularly if
> the OP goes with a FHA loan)

I am more conservative than you are. I think that the home owner
is going to want to see a movie once or twice a year, and maybe
eat out on Mother's day. If you spend all of your disposable
income on a house, you end up house poor, and the blessing of a
home soon turns into a nightmare of a big empty box where you
cannot afford to buy one stick of furniture. I see it all the
time in some of the higher end sub-divisions--people who have
entire rooms in the house totally empty because they cannot
afford to buy furniture, and they have already raided their
401K's and maxed out the gold cards. A lender that allows someone
to do that is unethical at best, and at worst, a criminal worthy
of being shot.

There is a reason why 10% of home mortgages are in default
at a time when this country has unprecedented wealth. Letting
people buy way too much house is a big part of that problem.

-john-

--
============================================================ ==========
John A. Weeks III 952-432-2708
Newave Communications
============================================================ ==========

Re: Looking for opinions...

In article <>,
"John A. Weeks III" <> wrote:

>[stuff deleted]
>
> What ever happened to the concept of a young couple buying
> a starter house, and then moving up later on when they could
> afford it? I guess that is how one ends up bankrupt within
> 3 years of taking their training wheels off an becoming an
> adult.
>
> -john-


Around here (S Cal) starter homes start at 500K ;-(
--
Had It
I'm a hypocrite, I'm intolerant of intolerance.

Re: Looking for opinions...

In article <>,
"John A. Weeks III" <> wrote:
> I see it all the
> time in some of the higher end sub-divisions--people who have
> entire rooms in the house totally empty because they cannot
> afford to buy furniture, and they have already raided their
> 401K's and maxed out the gold cards. A lender that allows someone
> to do that is unethical at best, and at worst, a criminal worthy
> of being shot.

Yes, I've seen and heard of this too, however it is Congress and the
banking lobby that have allow this to happen, esp. with credit cards, ie
the interest rates charged by many issuers is legalized theft.

>
> There is a reason why 10% of home mortgages are in default
> at a time when this country has unprecedented wealth. Letting
> people buy way too much house is a big part of that problem.
>
> -john-

Unfortunately, being stupid is not illegal, people have been sold a pot
of crock when it comes to oversized houses. If you think 10% is bad
wait till the next recession hits.
--
Had It
I'm a hypocrite, I'm intolerant of intolerance.

Re: Looking for opinions...

In article
<>,
Burr Man <> wrote:

> Around here (S Cal) starter homes start at 500K ;-(

That is simply too much money. That is a clue to move
some place less expensive and more friendly towards families.

-john-

--
============================================================ ==========
John A. Weeks III 952-432-2708
Newave Communications
============================================================ ==========