Pay & Stay - Options If I Want To Move

Housebroken13

LoanSafe Member
Jul 17, 2009
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Hi, I have settled my Second Mortgage and had the lien removed. My first mortgage was discharged in a Chapter 7 back in 2009. Since then we have stayed in the home w/ a modified mortgage and reasonable payment. Yes, my 1st is still underwater.

At this point in time now that my second is taken care of what are some options I can employ if I wanted to move out of my home and get setup with a new mortgage on a home that better fits my families needs (we have grown to a family of 5 since moving here)
 

Moe Bedard

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Staff member
Loan Safe Mortgage
Aug 10, 2007
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Hi Housebroken13,

Your options are limited. After bankruptcy you will not be eligible with most lenders such as Fannie Mae, Freddie Mac etc to take out another mortgage for about 3-5 years. There is the FHA Back to Work Program where you can buy a home within 1 year. You need a minimum credit score of at least 580 to 620, a down payment of at least 3% minimum and to verify W-2 or federal tax returns. I believe there are alternative lenders that will lend after 1 year with 20-30% down and various other criteria for a 5/1 ARM.
 

Housebroken13

LoanSafe Member
Jul 17, 2009
814
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Thanks Moe. It was a very long road to settle the 2nd mortgage. We had our 1st discharged in the 2009 bankruptcy (so it's been 5 years since discharge for us), but continue to pay since the monthly payment is reasonable.

But the conversation of stopping payments has come up numerous times.. It's either that or wait to see if the market recovers and we could break even on a normal sale. Or if Fannie ever approves principle reductions.... I think we might be eligible for a loan via the Back to Work program in the next year or so (not sure if it will still be around); but I fear we will have to still deal with the underwater situation on our loan...

I'm hopeful our credit report will improve now that the lender will be removing the charged off account from our report; and the debt will be removed from our revolving debt amount thus improving our debt to income ratio.
 

We love our home but...

LoanSafe Member
Sep 26, 2011
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We were/are in the same boat however our value has increased significantly. If we were to want to move we would definitely try and sell and make a profit. Can't hurt to try right? I'd try that before walking away, however that option of being able to walk away without any tax consequences is still there because of the Ch. 7. I would honestly consult with a real estate agent before deciding anything.
 

MindyWishes

LoanSafe Member
Feb 24, 2017
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We are in a similar situation. Our family has grown and our house is quickly becoming too small. We would love to move but our area has not gone up like some areas around us so we are still slightly underwater. I guess we will keep riding it out and see if it improves.
 

Housebroken13

LoanSafe Member
Jul 17, 2009
814
13
18
anyone familiar with a mortgage release. Here in CT. I've been told you can get up to $10,000 for relocation costs.

We've been assuming we can walk away from this house w/o penalty or a need to do a short sale since it was discharged in bankruptcy. I think we are looking to get approved for a new mortgage and then rent this home out.

Another part of us wants to stay and just remodel, but how could we do that? We would have to get a new mortgage? No clue....