How Long do you have to wait to get Approved for a Mortgage, if you Filed for Chapter 13?

Transcription

Steve Currington: This is stevecurrington.com and the Steve ‘N Tyler Show Episode 40.
Announcer: Welcome to the Steve ‘N Tyler Show with stevecurrington.com and Tyler Whyburn.
Steve: Who negotiated the contract for you.
Tyler: A realtor.
Steve: That’s very smart, good for you, man.
Announcer: They’re talking about everything you need to know about mortgages, home loans and more. Nobody knows mortgages like these two. Get ready because here’s Steve and Tyler.
Steve: I feel like I need to start every podcast like this. Yo-yo-yo-yo-yo-yo. Tyler, what’s up?
Tyler: [laughs]
Steve: How’s it going? Oh gosh. Here we are in the Thrive15 Studios in Jinx America talking about Tulsa mortgage loans. Tulsa mortgage loans. Tulsa mortgage Lender? Tyler?
Tyler: Yes.
Steve: How’s it going?
Tyler: It’s going well.
Steve: Good. It’s going well for me too. Hey, so we are talking today– This is going to be a very specific podcast because we’ve talked before about how long I have to wait from the time I filed bankruptcy to get a mortgage. And we’ve talked about– Every loan program is different so conventionally, you got four years, FHA’s two, USDA three but that’s on a Chapter 7. Now it’s a whole different ball game if you file a Chapter 13, right?
Tyler: Yes.
Steve: Here’s what’s weird. Here’s the interesting thing. If I will file a Chapter 13 bankruptcy which– For anybody that doesn’t know, go Google it but a Chapter 13 is– A Chapter 7 absolves me of all my debts. I’m done. I don’t have to pay a thing. I pay my attorney, we’re good. It discharges 90 days after my file typically, and I’m done. A 13 is where you get on a payment plan, and you pay back all your creditors a percentage of what you owe them over a term. Three or four years, whatever your term is, okay. So when you’re in a Chapter 13 bankruptcy– Now you’ve filed Chapter 13, it hasn’t been discharged. So one would think, ” Well I filed Chapter 13, so when it’s discharged after the end of my four-year payment plan, then I can get a mortgage two years after that.” So really from the date of filling to the date of discharge to the date of when you can get a Tulsa mortgage lender that would be like six years, right?
Tyler: Yes.
Steve: So rules are the same for the discharge that once your Chapter 13 is discharged, to get an FHA loan, you’ll still commit two years. To get a conventional, you’ll still commit four year. VA, all of that is the same. However, there is one little caveat to the FHA guidelines and here’s what it says, “If I’m in a Chapter 13, and I’m still making payments on my Chapter 13, can I get a mortgage?” What’s the answer, Tyler?
Tyler: Yes, sir.
Steve: Yes you can because it is possible with an FHA loan because FHA allows you a purchase of a home provided that the monthly payments to the trustee; your bankruptcy trustee, are made on time so you have to be prepared to provide to your lender proof of timely payment, and you have to show that you’ve made all the payments on your– Because it kind of works like a trade line.
Tyler: Right.
Steve: It’s literally an account you owe money on. Tyler?
Tyler: Yes.
Steve: Tyler is looking at me like, mm-hmm.
Tyler: [laughs] Yes.
Steve: Sometimes, I have to remind Tyler that there’s not a rattle, and he said, “We’re on the radio.” I’m just kidding. But I set Tyler up all the time for stuff, and he’s looking at me doing the “What? What? What do you want me to say? Yes. You can get a bankrupt. You can get a mortgage after a Chapter 13.” So the other thing is that you have to go to the trustee of the bankruptcy and get permission. Think about it. You would think like common sense wise, right Tyler? This wouldn’t make any sense. Like, “Hey, I can’t afford to pay you anymore all creditors, so I’m going to pay you 15% of what I owe you so my $100.000 in debts that I had, credit cards and whatever. I’m going to pay you, but I’m only going to pay you 10% of it, ten grand. Over four years, I’m going to pay extra more dollars,” whatever it is. So I do that and then I get 12 months into it or maybe 15 months into it, maybe 24 months into it and I say, “Hey, I think I want to buy a house.” So you have to go to the bankruptcy court, to the bankruptcy trustee, the one that manages the whole thing that sets up your payments and get permission because they have to say, your trustee might wonder. If you can get enough money for a down payment and closing cost, then maybe you could just use those funds to pay off your Chapter 13.
Tyler: Right.
Steve: Because you’d literally took debt that you owed and you absolved yourself of it and so for you to step in and say, “Well I’m going to buy a house. I’m going to put down payment. I’m going to do all those stuff and then buy a house.” It’s going to require you to come up with some cash, right?
Tyler: Yes.
Steve: So you got to get permission from your trustee, it’s not just a giving. You might have a trustee that says, “You know what Dave, you’ve made all your payments, and that’s great, but before you go buy a house, I think you got to pay off what you owe to the Chapter 13.” And then if you’re Chapter 13 is done, if you have completed it and it gets discharged, you’re back on the counter again, right Tyler?
Tyler: Yes, sir.
Steve: It’s not often that the trustee is going to deny a request because the purpose of the bankruptcy is to get you absolved of the debt you can’t handle and get you back on track and get your credit going and all that stuff. I don’t know if I have heard of, maybe you have Tyler over trustee denying some of your request to buy or whether you’re in a bankruptcy. But we don’t also do a bunch of them, and I’ll tell you why because people don’t know. When you’re getting a Tulsa mortgage lender, you call your lender. Call me up and you’re in a Chapter 13 bankruptcy. It’s just not something that people think of. Like, “I’m in bankruptcy.”
Tyler: Didn’t we get back to back phone calls on debt?
Steve: We did.
Tyler: Yes.
Steve Currington: We did.
Tyler: Back to back.
Steve: We got different peoples with–This was like over a month ago or so. In like 15 minutes, we got two different people that called and said they’re in a Chapter 13, they wanted to buy, pretty interesting. But listen, it’s available, and you can do it. It’s just that there are some rules, so you need to get a Tulsa lender that can advise you appropriately on what you have available to you because if you don’t get with a lender, then you might think, “I need to get through my whole Chapter 13. I paid it off, and now I can go buy a house.” And then you go, “Tic toc buddy. You got 24 months.” So it would be more beneficial for you to do it before your bankruptcy is discharged.
Tyler: Yes.
Steve: So that’s what it comes down to because otherwise, you’re going to be waiting again. Now, if you’ve had some lates in your Chapter 13, then that might be a reason why, first of all, that you don’t qualify. But obviously, I doubt that you’re going to get permission from your trustee if you’re having trouble even making the payments on your Chapter 13. So think about that. You have a bankruptcy that you’re making payments on, you’re on a Chapter 13, and you’re missing payments, and then you’re going to come to your lender and say, “Hey, I want to buy a house. I’ve got permission from the trustee. I want to buy a house.” And we can see that you’re more than 30 days late, three times in the last 12 months on your bankruptcy. Tyler, is that person at good risk to buy a house?
Tyler: I don’t like it.
[laughter]
Steve: You’re probably– Just to be completely frank with you. “Hello. I’m going, to be frank.” Just to be completely frank with you. The answer is probably you and me now because if you can’t make the payments on your Chapter 13 bankruptcy, probably you shouldn’t be buying a house. I’m not judging. I think it’s like farm logic.
[music]
Steve: I know that my sound board sounds like mean other stuff, but they’re named, like farm logic. So that’s how I associate it with the like — met a farm and I have logic [laughs]. Probably it doesn’t mean that but here’s the point. Use common sense. If you can’t make the payments on your Chapter 13 bankruptcy, you probably shouldn’t be talking to a lender about trying to buy a house, in my humble opinion.
No, I’m just Steve Currington. I have done thousands of loans, and you probably don’t know what I’m talking about but be careful about getting your hopes up about buying a house while you’re on a Chapter 13 when you clearly have not made your payments on your Chapter 13.
Just to recap, here’s where it comes down to. I filed bankruptcy; I file a Chapter 7. I have two years on an FHA loan from my discharge date, Tyler. But if I have filed bankruptcy and I’m doing a Chapter 13 and I have been in that bankruptcy for 12 months and I get permission from the trustee, and I can demonstrate that I re-establish credit, and I can demonstrate that I have made all my payments on my bankruptcy on time, then I can qualify for an FHA loan to buy a new house while I’m in a Chapter 13 bankruptcy. Can anyone believe that?
[background noise]
Steve Currington: I’m looking around in the studio. There’s no one else here but me and Tyler.
Tyler: [laughs]
Steve: But–
Tyler: Anyone?
Steve: No one can believe it.
Tyler: No.
Steve: So anyway, that’s the whole story. As I’ve said, this is a very specific podcast. We are specifically talking about a Chapter 13, so we’ll get this. If you are listening to it now then obviously it’s up on the site but don’t forget to go to stevecurrington.com, Podcast@stevecurrington.com, GetKoalified.com or you can find us on iTunes store under the Steve ‘N Tyler Show. S-T-E-V-E the letter ‘N’, Tyler, Show. I’m Steve Currington. That’s our podcast for today. Thanks for listening.
[00:11:06] [END OF AUDIO]

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