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Buying a house while in Ch 13

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I was wondering if anyone had any experienceor knowledge of buying a house while in ch 13. I've read that it relies mainly on 2 things: 1) your trustee giving you permission and 2) a mortgage company willing to lend to you

So for starters I was wondering if you are supposed to ask your trustee yourself directly or dig up your lawyer to do it for you.

Also I pulled my credit score and it was not as bad as I thought which made me consider this as a cheaper alternative to renting. I'll probably put a similiar question in the mortgage thread.

In case it matters to answer. I currently rent a townhome for $1150 a month. I can buy a unit in this complex and the mortgage/hoa and taxes together would run me about $850.00 a month. I have about 10-15% for a downpayment.

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I was wondering if you are supposed to ask your trustee yourself directly or dig up your lawyer to do it for you.

I would consult the lawyer, after all he's on your payroll until you're discharged. I'm not sure how the trustee is going to feel about the 10-15% you have laying around for the DP. Some would want that.

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It will be very hard to pull that off...

1. No one is going to lend to you with an active BK going on...

2. As stated above, if you have a cash down payment laying around, your creditors are going to want it. And if you are concealing it from the trustee, that could be fraud and the whole weight of the Justice Dept will bear down on you for that - look at what happened to Lenny Dykstra.

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With all due respect my trustee is well aware of my financial position. I have the money from the sale of my other home which the trustee approved.

1st step: do you know no one will lend to me from experience or are you assuming? The reason I ask is that I see FHA will back a mortgage once someone is around 3 years in ch 13 as long as they have a minimum credit score of 660 and the down payment. I got that from the fha website. Of course that's why I am asking here because what FHA will back and what lenders do may or may not be the same.

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I used to broker loans in CA, and still have many friends that still are in the biz...

Many of the lenders will not do it because there is significant risk that they will not get paid back. If memory serves, FHA needs a discharged BK before they will loan to you.

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Actually, a Ch 7 and a Ch 13 are handled entirely differently for financing a new home.

With the latest underwriting criteria for FHA you can get a loan while you are in a Ch 13 as long as your Ch 13 payments are satisfatory and you have been in the Ch 13 for at least one year. Naturally you will need to meet standard FHA criteria. One of the good things you have going for you is that you sold your previous home and it was not a short sale or foreclosure. Otherwise there would be entirely different qualifying criteria.

You may have to search for a lender that will do it as some of them are very cautious now. They can make their own bank criteria more restrictive than the bare bones FHA criteria (and they frequently do).

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Here's how to do it.

Get a preapproval letter for $s needed.

Have your lawyer file a motion to incur debt post-confirmation. This motion will explain it all step by step and ask the court to bless the transaction. The trustee can't just give the thumbs up on this one. The attorney will probably charge you $500-$1000 depending if the attorney thinks it will require simply filing the motion, then a Motion for Default, then a Cert of No Response OR it may require a court appearance to discuss with trustee and judge.

Once the court blesses it, go for it.

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