Buying A House After Bankruptcy

by Lisa
(Middletown, New York, USA)

Ask Kate about buying a house after bankruptcy and short sale: Hi Kate, Can I find someone to loan me money after I am discharged from a Chapter 7 bankruptcy and short sale on my present house?

Lisa continues... We fell on hard times but are trying to rebuild our lives now. We need a new place to live and new mortgage ASAP!

We will have no debt other than 2 car loans and have $20,000 to use as a down payment. Our combined income is $155,000 a year and we can document income.

We are looking at a $310,000 house that is appraised at $413,000. It is a lakefront property in a desirable development. It was recently taken off the market after being listed for about a year and reduced three times by $25k each time.

There was two deals that fell through due to financing and the seller was aggravated so he took it off the market. The seller will still sell the property though.

With this motivated seller, our documented income with no other real debts, $20k down, and the fact that we are open to any interest rate, do you think we have a chance at getting approved of a mortgage?

Any offers or advice welcome. Please help! There has to be someone out there that will loan us money?? Isn't there??

Kate Answers: Buying A House After Bankruptcy

Dear Lisa,

Maybe I am all wet but buying a house immediately after bankruptcy and a short sale looks a whole lot like getting remarried the day after a divorce. The rebound syndrome.

I understand this house is a good deal. But the urgency you give off when you say "There has to be someone out there that will loan us money??", "we are open to any interest rate" and "we need a mortgage ASAP" is worrisome.

Most likely, there will be someone who will be willing to mortgage the home. But will you get an affordable fixed rate mortgage at reasonable mortgage closing costs?

How Much Mortgage Payment Can You Afford

More importantly, can you afford the monthly house payments? Just because a private money lender or mortgage company is willing to loan you money does not make the mortgage affordable.

Take for instance Holly who asked me why any lender would loan her friend this much money. Read my answer about your mortgage affordability and why a lender might not give a hoot.

Mortgage Tip: Lenders qualify but homeowners must consider mortgage affordability.

The most important question to ask yourself is Can I afford a mortgage for this house. Plain and simple, mortgage affordability is not the same as willingness on the part of a bank to loan you money.

Lisa, I hope to hear back from you. Let me know if this page is helpful to you. Anyone can Comment on Buying A House After Bankruptcy and Short Sale. Or Ask Kate another question here.

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Have You Seen The Most Recent Ask Kate Answers

• How To Calculate Mortgage Insurance
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Best wishes,

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