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The foreclosure tells lenders that you are a risk. You did it once, what's to stop you from doing it again? So, they become cautious when lending to those with foreclosures. But, like you said, "money talks" and that's why they are willing to risk lending you money just with hefty interest rates. If your serious and honestly want them to trust you again, fork over that talking money via interest.
Now I do have to ask, what is the source of your credit score? (as an FYI, many 60 month new car rates through the manufactures are only 3% for those with good credit, thats why I asked about the source of your credit score)
i dont see how if someone forecloses once, that they are somehow more of a risk to do it again, over someone who has never done it before. people do what they have to do in certain situations. whats to stop someone else from doing it for the first time over me doing a second time?
i am a member of credit karma dot com, who uses 2 different sources, transunion and equifax. one score is 696 and the other is 703. i bought a 1 yr old (used) vehicle. i got 5.5%.
i dont see how if someone forecloses once, that they are somehow more of a risk to do it again, over someone who has never done it before. people do what they have to do in certain situations. whats to stop someone else from doing it for the first time over me doing a second time?
You were foreclosed on.
You declared bankruptcy.
You have demonstrated that you are willing to walk away from your legal obligations so they don't want to be your next victim until you have proven (mostly with time) that you may not do it again. It really is not that complicated and I don't want to sound mean but, they plain old don't trust your word that you will repay the money because you reneged before. That's what it really comes down to.
You keep saying how proud you are of the 5.5% interest rate you got on a car, but that is a very high rate for a car. So many dealerships still do 0% or .9% to get a deal done. Your 5.5% should be a slap in the face.
You're a higher risk to foreclose again because you haven't experienced anything bad resulting from your decision if you're allowed to go right out and buy another house. You need to be punished which is why you're required to wait. Just like when a kid is bad, they're sent to their room. If they keep getting rewards for being bad, they will continue to be bad.
Bad behavior should not be rewarded. The lesson you should be learning is that you're not able to buy something right now and you get to sit around and wait while other people get to take advantage of prices today, and you get the opportunity after prices have gone up.
"How about a credit union?" Credit unions are owned by members, and because they are non profit, their rates are typically better than a bank or broker. But what most don't realize, their credit standards are slightly higher. Because of this, credit unions enjoy lower mortgage insurance rates and greater underwriting flexibility. When people hear "underwriting flexibility," they think relaxed credit standards. Just the opposite. Their better than average credit score will allow them to do a cash out refi on a home they bought 2 weeks ago, instead of waiting 6 months to a year. Or waive paying taxes and insurance in their payment. So, a credit union is not your solution.
So, you had a foreclosure. And a BK. Anyone that had good credit before these events will not see 500 credit scores after these events, unless that is where they were prior to the FC & BK. It doesn't happen that way. What matters when applying for a mortgage is how are the individual accounts rated from your past. One mortgage included in a BK would be viewed (and scored) differently than two mortgages in a BK and 6 credit cards. Anyone one can get consumer credit after a BK. Why? Because creditors know how difficult it is to be a repeat offender. But mortgages are for 30 years.
Lenders look at both events and apply the timeline. For conventional financing, you would wait 4 years from the BK and 7 years from the FC. The date furthest out is the soonest you can act on buying a home (using conventional financing). Extenuating circumstances aren't worth going over because so few actually qualify under this set of criteria. But then the question is, will you have 20% down, because mortgage insurance companies continually revise their guidelines to minimize risk? (You need 20% to avoid mortgage insurance and mortgage insurance criteria).If they allow FC & BK histories w/ short timelines, they must adjust their rates higher, making it too expensive for everyone. So, that pushes most buyers with either event into an FHA mortgage and that monthly MI is a tough nut to pay. And that is how the majority with an adverse credit event is buying. 20-25K down, in reality, will be about 5% on an average size home, because don't forget about closing costs.
I cannot begin to tell you how many of my customers that went FHA as their only choice are looking to get out. They put down 5 - 10% and are paying $250 - $450 in monthly mortgage insurance. They also purchased their home 3 years, to the very day they were eligible. They bought new (kind of like buying a new car - immediate depreciation of asset) and haven't made the equity of most resales and cannot refinance without putting in more cash, in some cases, as much as they put down when they bought. Their mortgage payments are more than what it would be to rent what they own. So, when things get tight, when one loses a job, or, something presents a major financial challenge, who will bail on their mortgage? They all have scores in the high 700's. Statistics show a large percentage are repetitive behavior.
The soonest you can expect to purchase is three years from the date of discharge or three years from the date the bank put your home back in their name. The latter can deliver an unpleasant surprise, as many banks wait to record title in their name until they are ready to resell the collateral. I've seen some delays as long as two years. So, check county records sooner than later (and there is nothing you can do to force their hand). And, to expect anything but an FHA mortgage or to buy any sooner is unrealistic.
You keep saying how proud you are of the 5.5% interest rate you got on a car, but that is a very high rate for a car. So many dealerships still do 0% or .9% to get a deal done. Your 5.5% should be a slap in the face.
You're a higher risk to foreclose again because you haven't experienced anything bad resulting from your decision if you're allowed to go right out and buy another house. You need to be punished which is why you're required to wait. Just like when a kid is bad, they're sent to their room. If they keep getting rewards for being bad, they will continue to be bad.
Bad behavior should not be rewarded. The lesson you should be learning is that you're not able to buy something right now and you get to sit around and wait while other people get to take advantage of prices today, and you get the opportunity after prices have gone up.
5.5% just 3 months after a BK discharge. That IS good. 0% and 0.9% are rates you get on NEW cars, not used ones.
i'll wait another yr or two i suppose, thats fine. i understand the banks being hesitant. if prices go up and up i'll just wait even longer until the prices drop significantly like in 08/09.
You were foreclosed on.
You declared bankruptcy.
You have demonstrated that you are willing to walk away from your legal obligations so they don't want to be your next victim until you have proven (mostly with time) that you may not do it again. It really is not that complicated and I don't want to sound mean but, they plain old don't trust your word that you will repay the money because you reneged before. That's what it really comes down to.
Exactly. I can't understand why banks would allow someone who has proven they are willing to walk away from their responsibility to take out another loan. It's not personal and I'm not saying that people who go through foreclosure or bankruptcy are bad people, I just don't think it makes good business sense for a bank to ever loan them money again. When they walk away and the bank can't sell the house for the value of the loan, who eats that loss? We do. They make it more expensive for everyone else to use bank services and make the market more unstable.
Let's face it - you did it once and you'd do it again if the conditions were right. Again, not making a moral judgement, just a financial one. But because banks have more greed than sense they'll eventually be willing to lend to you again, albeit at a high interest rate. You'll most likely just have to wait a few more years.
"How about a credit union?" Credit unions are owned by members, and because they are non profit, their rates are typically better than a bank or broker. But what most don't realize, their credit standards are slightly higher. Because of this, credit unions enjoy lower mortgage insurance rates and greater underwriting flexibility. When people hear "underwriting flexibility," they think relaxed credit standards. Just the opposite. Their better than average credit score will allow them to do a cash out refi on a home they bought 2 weeks ago, instead of waiting 6 months to a year. Or waive paying taxes and insurance in their payment. So, a credit union is not your solution.
So, you had a foreclosure. And a BK. Anyone that had good credit before these events will not see 500 credit scores after these events, unless that is where they were prior to the FC & BK. It doesn't happen that way. What matters when applying for a mortgage is how are the individual accounts rated from your past. One mortgage included in a BK would be viewed (and scored) differently than two mortgages in a BK and 6 credit cards. Anyone one can get consumer credit after a BK. Why? Because creditors know how difficult it is to be a repeat offender. But mortgages are for 30 years.
Lenders look at both events and apply the timeline. For conventional financing, you would wait 4 years from the BK and 7 years from the FC. The date furthest out is the soonest you can act on buying a home (using conventional financing). Extenuating circumstances aren't worth going over because so few actually qualify under this set of criteria. But then the question is, will you have 20% down, because mortgage insurance companies continually revise their guidelines to minimize risk? (You need 20% to avoid mortgage insurance and mortgage insurance criteria).If they allow FC & BK histories w/ short timelines, they must adjust their rates higher, making it too expensive for everyone. So, that pushes most buyers with either event into an FHA mortgage and that monthly MI is a tough nut to pay. And that is how the majority with an adverse credit event is buying. 20-25K down, in reality, will be about 5% on an average size home, because don't forget about closing costs.
I cannot begin to tell you how many of my customers that went FHA as their only choice are looking to get out. They put down 5 - 10% and are paying $250 - $450 in monthly mortgage insurance. They also purchased their home 3 years, to the very day they were eligible. They bought new (kind of like buying a new car - immediate depreciation of asset) and haven't made the equity of most resales and cannot refinance without putting in more cash, in some cases, as much as they put down when they bought. Their mortgage payments are more than what it would be to rent what they own. So, when things get tight, when one loses a job, or, something presents a major financial challenge, who will bail on their mortgage? They all have scores in the high 700's. Statistics show a large percentage are repetitive behavior.
The soonest you can expect to purchase is three years from the date of discharge or three years from the date the bank put your home back in their name. The latter can deliver an unpleasant surprise, as many banks wait to record title in their name until they are ready to resell the collateral. I've seen some delays as long as two years. So, check county records sooner than later (and there is nothing you can do to force their hand). And, to expect anything but an FHA mortgage or to buy any sooner is unrealistic.
thanks, very informative. as are you falconheadwest.
3 yrs is fine. i'm halfway there. i wont pay a crazy int rate tho, so if too high i will wait it out.
I don't want to pop your balloon, but getting consumer financing after a BK is a cakewalk. They know you aren't doing that again for 7 years. Credit card offers should be flooding your mailbox by now, if not, soon. You have a target on your back, saying "I'm stuck paying my bills for 7 years!" Be very careful, it's real easy to get into a really bad place right now. Do accept one or two credit card offers and use them sparingly.
I don't want to pop your balloon, but getting consumer financing after a BK is a cakewalk. They know you aren't doing that again for 7 years. Credit card offers should be flooding your mailbox by now, if not, soon. You have a target on your back, saying "I'm stuck paying my bills for 7 years!" Be very careful, it's real easy to get into a really bad place right now. Do accept one or two credit card offers and use them sparingly.
I have one credit card- came in the mail several months after the BK. i got a $3k limit right off the bat. like i said, i know how to get my credit back up, i'm at 703 again already. one yr after BK. i had a 800 score before the age of 30. its not like i'm going to go buy a bunch of stuff and be irresponsible. i'm 33 yrs old.
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