Bankruptcy and Foreclosure Waiting Periods to Qualify for Home Loan
Mortgage lenders will accept a mortgage application if the mortgage loan borrower had a prior bankruptcy and/or a foreclosure or both. However, there is a bankruptcy and foreclosure waiting periods For a mortgage loan who filed bankruptcy, there is a 2 year waiting period after the discharge date of the bankruptcy. The two year period does not start until the actual discharge date and not the filing date of the bankruptcy. One day after two years of the discharge date, the borrower can apply for a mortgage application. For a foreclosure, there is a 3 year waiting period from the date of the sheriff’s sale or the date the deed was transferred out of the homeowner’s name.
Recorded Date of Foreclosure is when waiting period starts
Many mortgage lenders are in no hurry to transfer the foreclosure out of your name into the lender’s name. Sometimes it might take them a year or longer before they transfer your name out into their name. If you are going through a foreclosure, make sure that your name gets transferred out of the deed of the house or it might prolong your bankruptcy and foreclosure waiting periods.
Bankruptcy and Foreclosure Waiting Periods when mortgage part of bankruptcy
For those homeowners who had a bankruptcy and foreclosure at the same time, the waiting period will be three years because the foreclosure waiting period is 3 years and the bankruptcy waiting period is 2 years. Even though your foreclosure was part of the bankruptcy, the latter applies. Many mortgage loan borrowers think that because the foreclosure was part of the bankruptcy, they only need to wait two years but that is absolutely not correct.
Bankruptcy and Foreclosure waiting periods is a rule and regulation that cannot be broken and there are no exceptions in waiving the bankruptcy and foreclosure waiting periods. However, you can consult with a mortgage broker prior to your bankruptcy and foreclosure waiting periods is over so you can plan on rebuilding your credit and improving your credit scores.
2015 update on Bankruptcy and Foreclosure Waiting Periods
For conventional loans, if your mortgage is part of your bankruptcy, the waiting period is 4 years from the discharge date of your bankruptcy. The deed of the mortgage can be recorded after the discharge date of your bankruptcy with conventional loans. This rule does not apply for FHA insured mortgage loans. For FHA loans, if you have a mortgage part of bankruptcy, the waiting period does not start until the recorded date of your foreclosure or the date of the sheriff’s sale.
If you have any questions on the bankruptcy and foreclosure waiting periods, please contact me at www.gustancho.com .
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