Reaffirm Mortgage?

[CSNH11]

I'm filing BK7 and have questions about reaffirming home. My loanwas just modified and been extended 11 years (been in home for 11 years). Pondering reaffirm or not reaffirming. Wondering what might be the best option in regards to getting a new home to start all over.
Would NOT reaffirming screw me from getting a home in the next couple years. Are there programs (I'm VA eligible) that I would need with little down payment?



Thanks

 

[bgriff]

I'm filing BK7 and have questions about reaffirming home. My loanwas just modified and been extended 11 years (been in home for 11 years). Pondering reaffirm or not reaffirming. Wondering what might be the best option in regards to getting a new home to start all over.
Would NOT reaffirming screw me from getting a home in the next couple years. Are there programs (I'm VA eligible) that I would need with little down payment?



Thanks

Your attorney will (if they are any good) strong-arm you into not re-affirming any of your debts. Besides, why would you want to? You're filing BK7 for a reason. As far as buying a house in the future, your choices during your bankruptcy will be to 1) surrender or 2) retain the home (and any other assets). If you choose to surrender the home, then you can purchase within 2 years (per the new Fannie guidelines). Problem is, your lender will take the home by foreclosure due to your intent. If choose to retain ("pay and stay"). It's 2 years after the deed is out of your name. Ideally what you do is "retain" and then just sell the home in a traditional sale and then you are free to purchase at any time.

 

[Erik Sandstrom]

Bgriff has the right idea but the timelines are a little off, but great response!

If you include your property in BK and mark the box "Surrender" you can still remain in the home and make payments. If your property ultimately forecloses it will go by the bankruptcy seasoning period rather than foreclosure however you would want to show your intent right after the bankruptcy and that would be missing payments if you're really planning on surrendering it. Bankruptcy seasoning periods are 4 years for Chapter 7 BK for Conventional loans.

FHA considers bankruptcy and foreclosure 2 separate events, if the property forecloses the foreclosure timeline would start ticking once the deed is out of your name (not when you were discharged from bankruptcy).

If you mark the box "Retained" and continue to make payments, that obviously means you want to keep the home. If you owe more than the home is worth it may be best to mark the box Surrender but again with a new (purchase) loan - if you stay and pay the new lender will look at the transaction history and deny a new loan based on the fact that you really were planning on "keeping the home" and maybe did a strategic default after.

Hopefully this provides some insight, if you have any more questions don't hesitate to ask.