I have a question for anyone who is a mortgage broker, banker or has been in this situation. My BIL just told us that he purchused a home. The question I have is how did that happen. He filed for bankrupcy 4 years ago. He also said that he got the loan for 4.5% interest. Now, my DH and I have perfect credit and the best we can do with a refinancing loan is 5.5%. So how is it that one who has bad credit gets a large loan and gets such a low rate?????
File bankrupcy....get low interest mortgage????
- Thread starter ckmommy
- Start date
I'm not sure how it works but would also be curious to hear the answer. My brother and SIL have filed bankrupcy as well, yet somehow were able to buy a $500,000 home at a very low interest rate as well. Which is scary, since the reason they filed bankrupcy in the first place is because they lived beyond their means and are destined to repeat their same patterns with this new home..........
Snoopy,
That is what happened here as well. I am really pretty angry about the situation. Especially considering that the home BIL purchused is just a little less money than we purchused our house for. My DH has a great job, BIL does not--at all. Some months we are wondereing how we are going to pay all of our bills. I have no clue how a mortgage co. could even think of giving this much of a loan to BIL???????
That is what happened here as well. I am really pretty angry about the situation. Especially considering that the home BIL purchused is just a little less money than we purchused our house for. My DH has a great job, BIL does not--at all. Some months we are wondereing how we are going to pay all of our bills. I have no clue how a mortgage co. could even think of giving this much of a loan to BIL???????
AllyandJack
* Here is where a picture of my girls would be, if
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I find this annoying, too. DH and I have great credit and a good income, yet we were literally tortured by our mortgage company. Pay stubs from 2 years prior! They actually pushed our closing back 4 weeks because they asked for MORE paystubs and one of them was a week that DH was on military duty and he only worked 24 hours. This twit called him at work and asked him if he normally only works 24 hours a week! Hello! You have 2 years worth of 40 hour work weeks! They pushed our closing back because they needed to see 4 weeks of 40 hour work weeks. PLUS, the wanted a copy of his military orders.
Yet, my aunt and uncle have no problems. They filed for bankruptcy 3 years prior. She works for $10.00 an hour and he is on social security disability for being obese (but somehow manages to work under the table 20 hours a week). They just float right through with their closing. No problems. No hassles. They are on the verge of losing their house because the recently refinanced and the new company doesn't escrow their property taxes and they are "surprised" by these bills every 3 months.
Yet, my aunt and uncle have no problems. They filed for bankruptcy 3 years prior. She works for $10.00 an hour and he is on social security disability for being obese (but somehow manages to work under the table 20 hours a week). They just float right through with their closing. No problems. No hassles. They are on the verge of losing their house because the recently refinanced and the new company doesn't escrow their property taxes and they are "surprised" by these bills every 3 months.
I worked for a mortgage company for seven years until I got married. For the most part, if a bankruptcy is older than 2 years we didn't really pay a lot of attention to it, especially if the borrower has re-established their credit history and has had a good payment history since. Remember, there are different categories of bankruptcy. A Chapter 7 is worse than a Chapter 14. Chapter 7 you wipe out all debt and don't try to repay anything.
ckmommy, one factor that could influence your higher interest rate is your debt ratio, which is your total household income compared to your total monthly bills. The higher the debt ratio, the higher the interest rate. Also look at the loan to value of your loan. How much of the value of your home are you looking to refinance. An 80% LTV will get a much better rate than if your trying to borrow 95-100%.
One thing to always remember with mortgages these days is that they are almost entirely credit score driven. Mortgage companies will pull your credit report from three different credit reporting agencies and take the middle score. That score determines which of their programs you fit into and what your interest rate will be. There's a million different factors that go into determining someone's credit score, some that don't always make a lot of sense.
Hope this helps a little bit!
Jennifer
ckmommy, one factor that could influence your higher interest rate is your debt ratio, which is your total household income compared to your total monthly bills. The higher the debt ratio, the higher the interest rate. Also look at the loan to value of your loan. How much of the value of your home are you looking to refinance. An 80% LTV will get a much better rate than if your trying to borrow 95-100%.
One thing to always remember with mortgages these days is that they are almost entirely credit score driven. Mortgage companies will pull your credit report from three different credit reporting agencies and take the middle score. That score determines which of their programs you fit into and what your interest rate will be. There's a million different factors that go into determining someone's credit score, some that don't always make a lot of sense.
Hope this helps a little bit!
Jennifer
I've also heard that sometimes you can get this type of credit easily after a bankrupcy because they can't file again for so long. Someone that goes to a credit counseling and works on their debt has a lower rating than someone who has discharged with bankrupcy.
Jen S.,
Thank you for your explination. I still find it hard to believe that someone with such poor credit can get such a loan. I believe my BIL did the ch. 7, because he did not have to pay anything back...boy I would love to charge up my credit cards for a few month and then not have to pay them or give back what I bought! But I am an honest person, and love my good credit.
I actually just got back from the bank right now. I need to crunch some #'s to see if refinancing is a good thing for dh an myself. I was just told that we may not have to pay closing costs, which in TX can be up to $5000. As for our loan to value ratio, I am thinking it is about 65%. I still was only offered the standard interest rate (5.74% today)
Is there some low income interest rate that BIL claims to have gotten? Who qualifies for that and how??
Thank you for your explination. I still find it hard to believe that someone with such poor credit can get such a loan. I believe my BIL did the ch. 7, because he did not have to pay anything back...boy I would love to charge up my credit cards for a few month and then not have to pay them or give back what I bought! But I am an honest person, and love my good credit.
I actually just got back from the bank right now. I need to crunch some #'s to see if refinancing is a good thing for dh an myself. I was just told that we may not have to pay closing costs, which in TX can be up to $5000. As for our loan to value ratio, I am thinking it is about 65%. I still was only offered the standard interest rate (5.74% today)
Is there some low income interest rate that BIL claims to have gotten? Who qualifies for that and how??
ckmommy,
Is there a credit union you can join? Sometimes they have lower rates.
Also, if you aren't going to be there forever, look at a balloon mortgage.
I think in general home equity loans have a higher rate than regular mortgages.
Also, a 15 year mortgage will be lower than a 30 year.
Good luck!
Susan
Is there a credit union you can join? Sometimes they have lower rates.
Also, if you aren't going to be there forever, look at a balloon mortgage.
I think in general home equity loans have a higher rate than regular mortgages.
Also, a 15 year mortgage will be lower than a 30 year.
Good luck!
Susan
I've heard that after the consumer bankruptcy hearings, folks are out in the hall passing out credit card applications, because they can't file again for, I think, 7 years.
My aunt bought an old "fixer upper" home in a neat part of her town. She charged furniture, appliances, supplies, everything she needed, on multiple credit cards (along with a face lift for herself, I might add), then she filed bankruptcy. She now has a drop dead home, and is starting again on the credit cards. I call that fraud.
My aunt bought an old "fixer upper" home in a neat part of her town. She charged furniture, appliances, supplies, everything she needed, on multiple credit cards (along with a face lift for herself, I might add), then she filed bankruptcy. She now has a drop dead home, and is starting again on the credit cards. I call that fraud.
I bet his loan is an adjustable rate mortgage. they would be lower than fixed loans. that being said, don't envy him because fixed rates are incredible right now and when things go up you will be the one with a nice low rate and he will be bankrupt again.
Mskanga
<font color=navy>Can speak and read 4 languages fl
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I don't know how they did it because bankruptcies stay on your credit record for 7-10 years. On a chapter 7 you wipe out everything but if you have a car or a house that you want to keep, you can re-affirm the loan and keep them, which means you keep paying. On a chapter 13 you re-organize and pay back to the creditors. Something smells fishy here , I don't think they are telling you the truth.
DH filed bankruptcy(long story) about 9 years ago. We bought our first home 3 years ago. We were able to get the mortgage but had a higher interest rate than what was available at the time. The only way we would've been able to get a lower rate was if we A- "bought points" for a could thousand you can buy the "points" up front to lwer the rate. or B- get an "arm" We took the higher rate because we knew we wouldn't be in that house long. Since then we are on our 3rd home. Our rate now is 5.3%. After my DH filed bankruptcy he has been able to lease/finance cars, get credit cards, purchase our home, etc. All things are a factor like how your credit history is after you claimed bankruptcy. If your debt to income ratio is where it should be for your income bracket, also your income. DH makes very good money, our debt to income ratio is where it should be, and we have never been late on any of our payments. He has a very good credit histry since the bankruptcy.
I don't understand why the anger towards a family member for getting a good rate? Shouldn't you be happy for them? Everyone's situation is different. Just because something "appears" to be a certain way doesn't mean it is. You don't know anyones real finances so why judge?
DH had to claim bankruptcy because his father died and he had to take on the responsibilities of the household. All the debts were medical bills because he had no coverage, was going to school full time, working 2 jobs and living on his own. His car was the only "materialistic" thing he claimed the bankruptcy on. No credit cards at all. Yet when we would buy something alot of people looked at us like we were doing something wrong. Because DH got dealt a bad deal in life means we should suffer and never have nice things? Sorry, for the vent.
I don't understand why the anger towards a family member for getting a good rate? Shouldn't you be happy for them? Everyone's situation is different. Just because something "appears" to be a certain way doesn't mean it is. You don't know anyones real finances so why judge?
DH had to claim bankruptcy because his father died and he had to take on the responsibilities of the household. All the debts were medical bills because he had no coverage, was going to school full time, working 2 jobs and living on his own. His car was the only "materialistic" thing he claimed the bankruptcy on. No credit cards at all. Yet when we would buy something alot of people looked at us like we were doing something wrong. Because DH got dealt a bad deal in life means we should suffer and never have nice things? Sorry, for the vent.
Lisa F
is a very wise woman
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We've been dealing with getting a mortgage on a house purchase, so I know the feeling of "we have great credit and decent income, why is this so torturous?" The answer is that you are getting a better rate AND better terms from a reputable lender, who can offer better rates and terms because they more highly scrutinze who they give money to.
Rates are only ONE part what makes a loan a good deal or a bad one. In talking about rates with my mortgage broker, he said that he could get us a loan with an interest rate of 1% if we wanted, but we wouldn't want that kind of a loan. It has tons of up front costs, crazy high prepayment penalties and is an interest-only loan which runs the risk of negative amortization. I would not be surprised if their 4.5% is a loan with some pretty hefty fees and crazy terms associated with it.
Anyway, it is somewhat frustrating to be someone who pays their bills on time even though it may be a struggle sometimes and sees people who take the easy way out. I'm not talking about people who file for bankrupcy for legitimate reasons (like getting into a hole there is no other way they can dig themselves out of through no fault of their own) but people who use it as a get out of jail free card after living the high life while we work our tails off really tick me off. On the other hand, I try not to expend much energy worrying about what other people do or comparing myself to them because I've found that energy is much better served making MY life better. It's just not worth getting bent out of shape over.
Rates are only ONE part what makes a loan a good deal or a bad one. In talking about rates with my mortgage broker, he said that he could get us a loan with an interest rate of 1% if we wanted, but we wouldn't want that kind of a loan. It has tons of up front costs, crazy high prepayment penalties and is an interest-only loan which runs the risk of negative amortization. I would not be surprised if their 4.5% is a loan with some pretty hefty fees and crazy terms associated with it.
Anyway, it is somewhat frustrating to be someone who pays their bills on time even though it may be a struggle sometimes and sees people who take the easy way out. I'm not talking about people who file for bankrupcy for legitimate reasons (like getting into a hole there is no other way they can dig themselves out of through no fault of their own) but people who use it as a get out of jail free card after living the high life while we work our tails off really tick me off. On the other hand, I try not to expend much energy worrying about what other people do or comparing myself to them because I've found that energy is much better served making MY life better. It's just not worth getting bent out of shape over.
Mermaid02
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We know someone who filed a year or so ago and has had another child since (cha- CHING) and is building a HUGE house. We would have liked more kids (can't afford them, have to take care of the 2 we have) and another bedroom would be WONDERFUL.... as would another bathroom...... but we can't afford that either. Maybe I should run up the credit cards.
Desnik,
Maybe if you read all of the posts, you would have seen that the Chapter 7 bankruptcy my BIL filed was nothing like that of your DH. My BIL ran up THREE credit card to there max, had a $6000 phone bill and skipped out on the rent of his apartment for 3 months. He has never paid any of this money back!!! He did not have a house or car payment.
There are those that file for bankruptcy for reasons that can not be helped but others that file and take a lot from the rest of us!!!
My problem with this whole mortgage issue is that he is claiming to get this great interest rate when he has not proven to a bank that he is able to use any money wisely! He does not have a car loan--my in laws bought him a brand new car, no rent and no credit cards for the last 4 years. I have had a car loan--paid it off, had 2 homes, pay my bills on time and in full each month. Still, I get a highter interest rate than BIL who will in all likelyhood will file for bankrupcy with this house because he bit off WAY more thaan he can swallow!
Maybe if you read all of the posts, you would have seen that the Chapter 7 bankruptcy my BIL filed was nothing like that of your DH. My BIL ran up THREE credit card to there max, had a $6000 phone bill and skipped out on the rent of his apartment for 3 months. He has never paid any of this money back!!! He did not have a house or car payment.
There are those that file for bankruptcy for reasons that can not be helped but others that file and take a lot from the rest of us!!!
My problem with this whole mortgage issue is that he is claiming to get this great interest rate when he has not proven to a bank that he is able to use any money wisely! He does not have a car loan--my in laws bought him a brand new car, no rent and no credit cards for the last 4 years. I have had a car loan--paid it off, had 2 homes, pay my bills on time and in full each month. Still, I get a highter interest rate than BIL who will in all likelyhood will file for bankrupcy with this house because he bit off WAY more thaan he can swallow!
Don't you know how true the old saying "what goes around, comes around" is!!?? Just because you feel he is getting away with something doesn't mean he won't pay for it in the long run. People don't behave like your BIL and have no consequences. He will someday. What I don't understand is why you are letting it get to you. "Maybe if you read all the posts" Why are you so angry. Who cares? You are happy, a good person, do the right thing. So what if he gets a lower interest rate? Why concern yourself with his finances if it gets you so mad?
BTW, my husbands bankruptcy was chapter 7 also.
Sounds like the bank you are using is making you "jump through hoops" to get a decent rate. If you are not happy with them, have you tried another bank? When we got our mortgage we used a broker that basically "farms out" our application to a bunch of banks. I guess it is kind of like lending tree on the internet. Anyway, we were able to pick the bank that gave us the best terms, and rate. Maybe your BIL rate is a "floating rate". Believe me, it isn't as good as he wants people to think. I'm sure strings are attatched. I just don't like hearing people get all "worked up" about something they have no control over. I was just trying to make you realize worrying about it will only stress you out, not change your BIL. Sorry for trying to make you see a different light.
BTW, my husbands bankruptcy was chapter 7 also.
Sounds like the bank you are using is making you "jump through hoops" to get a decent rate. If you are not happy with them, have you tried another bank? When we got our mortgage we used a broker that basically "farms out" our application to a bunch of banks. I guess it is kind of like lending tree on the internet. Anyway, we were able to pick the bank that gave us the best terms, and rate. Maybe your BIL rate is a "floating rate". Believe me, it isn't as good as he wants people to think. I'm sure strings are attatched. I just don't like hearing people get all "worked up" about something they have no control over. I was just trying to make you realize worrying about it will only stress you out, not change your BIL. Sorry for trying to make you see a different light.
You are actually somewhat of a less credit risk after filing bankruptcy than prior to because you can't file again for so many years. Also, you now have little to no debt and hence your debt to income ratio is very low.
I'll put myself out here for a moment (in my flame retardant suit) DH and I are in the process of filing chapter 7 bankruptcy (we aren't paying anything back). Now, I actually have no credit cards. I will continue to own my house and 2 vehicles. BUT we will still pay for these items as we have been.
Now, the reason we are filing, about 18-24 months ago I had to have surgery (unexpected) not even 8 weeks later DH got kidney stones that required 2 surgeries (they got lodged). In addition he wound up w/ a MRSA (resistant staph infection) that put him back in the hospital for another week, included another surgery. Once released he had to go on home care for twice a day IV antibiotic treatments for an additional 4 weeks. At $400.00 a day. Then once all this was done he had the IV line (placed in his chest) pulled and developed blood clots at the site, this required an additional round of medical care (they actually wanted to readmit him and he refused). In the end we wound up with over $50,000 in medical bills (we had no insurance coverage for any of it)!!
Trying to make minimum monthly payments became impossible. There were too many people to pay. Hospitals, dozens of doctors, anesthesologist, radiologists, labs, ect, ect......
Anyhow, we actually want to buy a new house. As long as the debt is outstanding we cannot. Even after I tried to pay some on each bill here and there-- the sent them to collections-- then added more fee's, interest and late fees, legal fee's- the whole 9 yards. In the end this debt is now almost $80,000 and it's all medical bills. We are stressed and sick to our stomachs over this. So we began the process. When this all started we had planned on looking for a new house then-- wasn't gonna happen. We figure if we file now-- we should be able to get a mortgage in about 2-3 years. Are we trying to "play the system"--NO-- we are trying to get out from underneath this. We didn't go out and charge up a bunch of credit cards, and then try to ditch the debt. Some people have unique situations. I am embarassed by what we are doing, but we truly feel we have no choice.
I'll put myself out here for a moment (in my flame retardant suit) DH and I are in the process of filing chapter 7 bankruptcy (we aren't paying anything back). Now, I actually have no credit cards. I will continue to own my house and 2 vehicles. BUT we will still pay for these items as we have been.
Now, the reason we are filing, about 18-24 months ago I had to have surgery (unexpected) not even 8 weeks later DH got kidney stones that required 2 surgeries (they got lodged). In addition he wound up w/ a MRSA (resistant staph infection) that put him back in the hospital for another week, included another surgery. Once released he had to go on home care for twice a day IV antibiotic treatments for an additional 4 weeks. At $400.00 a day. Then once all this was done he had the IV line (placed in his chest) pulled and developed blood clots at the site, this required an additional round of medical care (they actually wanted to readmit him and he refused). In the end we wound up with over $50,000 in medical bills (we had no insurance coverage for any of it)!!
Trying to make minimum monthly payments became impossible. There were too many people to pay. Hospitals, dozens of doctors, anesthesologist, radiologists, labs, ect, ect......
Anyhow, we actually want to buy a new house. As long as the debt is outstanding we cannot. Even after I tried to pay some on each bill here and there-- the sent them to collections-- then added more fee's, interest and late fees, legal fee's- the whole 9 yards. In the end this debt is now almost $80,000 and it's all medical bills. We are stressed and sick to our stomachs over this. So we began the process. When this all started we had planned on looking for a new house then-- wasn't gonna happen. We figure if we file now-- we should be able to get a mortgage in about 2-3 years. Are we trying to "play the system"--NO-- we are trying to get out from underneath this. We didn't go out and charge up a bunch of credit cards, and then try to ditch the debt. Some people have unique situations. I am embarassed by what we are doing, but we truly feel we have no choice.
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