Qualifying for mortgage?

[arvad]

My brother and sister in law are looking to sell their current house valued at about $80k and move into a nicer newer home valued between $150k and $165k. They declared bankruptcy right before the laws changed so they aren't required to pay any of that back. They say after 2 years, which will be this winter, its possible to get another mortgage once they sell their current house. They only have one salary coming in as she stays home with their 4 year old and 1 year old. He probably makes $30k-$35k.

I don't think they'll qualify for the amount they're looking at. But, I'm not in the industry. What would they qualify for if anything?

Not looking for judgements just facts.
Thanks.

[slaine]

I doubt that they will qualify for another mortgage.

Mortgage companies are very, very gun shy now. They sometimes look for the smallest excuse to say "no". With a recent bankruptcy, they don't have to look very far.

Besides, with income that low, they won't be able to qualify for a house that expensive unless they have a very large down payment.

[michelangelo]

They should check very carefully about the "aren't required to pay any of that back."

It would be a very, very unusual bankruptcy settlement that would wipe out the mortgage completely.

When they go to sell, they may find that the bank has a lien against the house.

[shadrach]

They will qualify for about 90k

[dubh35]

I don't understand why this would interest you being a sister and sister-in-law. Bankruptcies over 2 years might be considered for a mortgage loan. The ideal time for a mortgage lender would be 3 years, however, under certain circumstances some lenders would consider a new mortgage at 2 years from the filing of the bankruptcy.

Legally they would not be required to pay unsecured debt if filing a chapter 7. Secured loans such as a mortgage loan would be different.

The one good thing about your brother's situation is that apparently he has paid his mortgage as agreed which should make him have a very good credit score.

Your brother could probably apply for and be approved for a FHA mortgage loan. Applying for a FHA mortgage loan would require a smaller down payment, some programs have a down payment as low as 3.5%. The qualifying requirements are not as stringent as those of a conventional lender.

Your brother ratios would determine the amount of house he would be qualified to purchase. This is a formula used by underwriters based on the amount of debts on you brother's credit report he has to pay and the amount of income he has.

I hope this has been of some benefit to you, good luck.

"FIGHT ON"