Who Told you to Declare Bankruptcy?

By
Mortgage and Lending with Larry Bettag - Cherry Creek Mortgage

I see it all the time.  The phone call begins.  The people want to buy a home. 

THERE ARE FOUR THINGS YOU NEED TO BUY A HOME!

  1. Income

  2. Assests

  3. Credit

  4. Appraisal

In 2010, the collapse always begins with issue number three....

Credit

CREDIT

CREDIT!!!!!

You got credit issues!  So what?  Join the rest of the world!  Welcome to 2011!  We're in the post luxoriousWhen things get tough, don't panic....call someone for help living economy!  Nothing's easy anymore.  For the record....Lending isn't easy anymore!  It just isn't.  It's hard for me to lend money.  It used to be a slam dunk.  You have a pulse, then you have a loan.  The only real issue was whether you were alive and whether or not you had a valid social security number.  Now we need to verify everything, from top to bottom, over and over and over again.....or so it seems. 

Again....you're credit isn't good, so what!  What are you going to do?  Walk away from it?  Unfortunately, it will follow you around like your shadow.  No matter how fast you run, it's following you!  It's just not something that can be ignored.  Ignoring it doesn't mean that next month or next year you can buy a home. 

Bankruptcy?  Sure, it's one way to work a tough situation.  For those that are in way over their head and have no viable way out, it's the most extreme way to wash your debts away.  The problem is that for most loan programs you're handcuffed anywhere from three to five years AFTER THE DATE OF DISCHARGE!  That's a long time to say that you're not going to buy a home. 

image provided by dreamstime.  http://www.dreamstime.com/stock-image-pool-business-difficult-rimagefree1252252-resi2857788 

The problem is that most people don't believe that their situation and their credit can be fixed well enough to be put in a situation to buy a home. 

Frequently, I tell people "if you'll follow my directions, over the course of this year, we'll get you in a position to buy a home by the end of the year."

THE REAL PROBLEM IS INSTANT GRATIFICATION!

Waaaaaaaa, waaaaaaaaaa, waaaaaaaaaInvariably 8 out of 10 people think that the struggle to get back up is too great despite my words of encouragement.  They fall off the wagon and are drinking the "gloom and doom Kool-Aid" and give up!  Whaaaa, whaaa, whaaaaaaa.  

For those who are coachable.  For those who can follow advice, they are elated when they're back on track to buy their new home.  It happens, all within a year.  It thrills me, but they're ecstatic.  Hard work & sweat with great results to show for!

INSTANT GRATIFICATION...

often times becomes long term pain.  Why?  Because the attorney's say "hey, pay me X $,000 dollars and we'll wipe away all your credit in short order.  The took the bait, hook, line and sinker!  It's really a shame.....Sure the debt is wiped out quickly, it's like walking into the bathroom after the 300 pound dude has been sitting there for about a half hour.  It lingers and lingers and lingers.  How long?  Try 3 to 5 years! When I was in law school, I hated studying, but I'd tell myself "short term for the long term."  Just work on it for a year for a long term gain!

Image provided by Dreamstime.  http://www.dreamstime.com/stock-photos-face-in-the-mirror-rimagefree305210-resi2857788 

My adviceThink and look before you leap

.....look both ways before you cross the street.  You're probably closer to the top than you thought, but if you don't look before you cross, you could be spending a lot of time in the hospital wondering what just hit you!

 image provided by dreamstime.  http://www.dreamstime.com/stock-photography-this-way-rimagefree1265840-resi2857788 

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Show All Comments
Rainer
207,862
James L. Katz
Katz Realty Group - Aventura, FL

I agree completely.  I love the philosophy that i hear all the time, "the creditors are gonna have to make exceptions, because most everyone is going to have bad credit after this recession."  NOT!!  Glad to still be in the upper 700's and I hope to stay there!

January 07, 2011 12:05 PM #1
Rainmaker
115,984
Margo Currie
Exit 1 Stop Realty - Saint Augustine Beach, FL

You're so right. I know several people who rushed (or were rushed) into bankruptcy.

January 07, 2011 12:07 PM #2
Ambassador
1,277,143
Loreena Yeo
3:16 team REALTY ~ Locally-owned Frisco TX Real Estate Co. - Frisco, TX
Realtor® | Frisco TX Community Ambassador

Larry - Your title made me CRY. That's exactly what one of my short sale client did.

January 07, 2011 12:10 PM #3
Ambassador
625,691
Doug Rogers
Bayou Properties Realty - Pineville, LA
Your Pineville Louisiana Agent

Nice post! Nothing trumps a straight talking lender!

January 07, 2011 12:13 PM #4
Rainmaker
286,717
Barb Van Stensel
Chicago, IL

I have someone who bought a home (I didn't sell them the home, btw) under stated income then went out and bought two nice cars in the $50K price range each and shortly thereafter .. he lost his job.  Went in and got in way over their heads.  There home functions off of the graces of the neighbors electrical and cable sources.  Then, they do the bankruptcy thing because they are behind in their car payments, house payments, credit cards are closed because of excessive use and none payment and they think that they will be able to keep their cars and their home. 

Tough, Straight Talk.  Great post.  Keep them coming, please!

 

 

 

January 07, 2011 12:44 PM #5
Ambassador
984,344
Alan May
Coldwell Banker Residential - Evanston, IL
Evanston & Northshore of Chicago real estate

You don't need income to buy a house, don't need credit, nor appraisal.  What you need is money (which technically is your #2... assets)...

Now, if you don't have enough money, then you have to go begging for it.  If you find yourself on a lender's doorstep, you're going to need:

1. Income    2. Good credit     3.  Appraisal    4. The patience of Job.

January 07, 2011 12:52 PM #6
Ambassador
876,211
Larry Bettag
Larry Bettag - Cherry Creek Mortgage - Saint Charles, IL
Regional Vice-President

James.....protect that 700+.  It's so valuable!

Margo...indeed.

Loreena....didn't mean to make you cry!  Sorry about that, but here's to prventing others from making the same mistakes.

Doug...you bet!

Barb Van....it's a shame really.  It cuts both ways.  Not sure that bankruptcy should be allowed for irresponsible people either!  Thanks Barb!

Alan....you've got the 1,2,3 and 4!  Wish you worked down the street from me!

 

 

 

January 07, 2011 12:54 PM #7
Rainmaker
509,364
Mary Douglas
United Country Ponderosa Realty - Red Feather Lakes, CO
REALTOR, Red Feather Lakes, Colorado

Larry, it's often the easy fixes that get us into trouble.  Thanks for the post and hopefully you will save a few would- be buyers a lot of heartache.

January 07, 2011 03:12 PM #8
Rainmaker
675,536
Gene Mundt
www.genemundt.com - Joliet, IL
Mortgage Lender - Chicago/Chicagoland Mortgages

You hit on two hot buttons with me, Larry.  Instant Gratification.  The Sense of Entitlement.  Both need to be in the morgue and dead as a doornail, should you be seeking a mortgage in today's world.  They just don't mix well or at all with processing of a loan.  And I particularly liked the "waa .. waa .. waa" statement.  Still chuckling over that one ...

Gene

January 07, 2011 03:57 PM #9
Rainer
356,141
Lauren Selinsky Perez
CA Coastal Estates- Monarch Bay Real Estate DP - Laguna Hills, CA
REO -CEO - CDPE - SHORT SALES - Woman Owned

Larry, Many situations vary day to day.... and unfortunately BK is the only way to go for some people. I had a client that had their husband die in a car accident, speaks little English, husband was self-employed and had over 60k in credit. Her home was upside down for over 56%. She wasn't sure if she could get a job. :( So, that was 633k plus 60k credit, no job. She stayed in her house longer because of the BK, slowing things down, but it was sad and unfortunate... This was 2 years ago.

January 07, 2011 10:28 PM #10
Rainmaker
1,035,209
Joan Whitebook
BHG The Masiello Group - Nashua, NH
Consumer Focused Real Estate Services

I would definately want to get at least a second opinion before going the bankruptcy route.  I also have found that some small local lenders may be a good way to go for some of the situations that don't fit the fanny freddie framework.

January 08, 2011 11:29 PM #11
Ambassador
501,344
Pat Haddad
Keller Williams Indianapolis Metro NE - Carmel, IN
Carmel IN Real Estate Expert

Larry--You hit the nail on the head with instant gratification.  I grow immediately weary when the person on the other end of the phones asks if I have any lease to own homes.  They simply do not want to wait to get their credit in shape to buy.  ARRGGHHH!!

January 08, 2011 11:55 PM #12
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Larry Bettag

Regional Vice-President
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