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In this article, we will cover and discuss buying a house after selling home with late payments. One of the frequently asked questions is buying a house after selling home with late payments possible. There are instances when a homeowner is behind on their mortgage payments and decide to sell their home.

After they sell their home, their intention is buying house after selling home with late payments on the home they sold. Buying a house after selling home with late payments on the home they sold can create an issue when qualifying for a new mortgage. However, it is possible buying house after selling home with late payments with non-QM loans.

Can You Buy A House With Late Payments?

Homebuyers can qualify for a new mortgage with outstanding collections and a charge-off account. They can qualify for a new mortgage with low credit scores. However, all lenders want to see timely payments in the past 12 months by borrowers. This holds especially true with timely mortgage payments in the past 12 months Qualifying for a mortgage for buying a house after selling home with late payments in the past 12 months on a prior mortgage is possible with Non-QM Loans.

A large percentage of our borrowers at Gustan Cho Associates are Non-QM Mortgage Borrowers. In the following paragraphs, we will be covering and discussing buying house after selling home with late payments in the past 12 months. Click here to apply for a mortgage with late payment

Getting Automated Underwriting System (AUS) With Recent Late Payments

All government and conventional loan applications need to go through the automated underwriting system (AUS). There are three AUS FINDINGS.

1. Approve/Eligible which means the AUS rendered an automated underwriting system approval.
2. Refer/Eligible which means the automated system cannot render an automated approval and VA and/or FHA loans needs to be downgraded to a manual underwrite.
3. Refer/With Caution which means the borrower does not qualify.

Qualifying for a mortgage for buying a house after selling home with late payments in the past 12 months is possible if the borrower can get an approve/eligible per the automated underwriting system. One or two late payments are not always a deal killer. However, multiple late payments in the past 12 months will be difficult in getting automated approval per AUS.

How far Back do Mortgage Lenders Look at Late Payments?

Buying House With Late Payments on Prior Mortgage In The Past 12 Months

It is possible buying house after selling home with late payments on the prior mortgage payments in the past 12 months. Borrowers who cannot get an approve/eligible per automated underwriting system (AUS) on government and/or conventional loans, may qualify with non-QM loans.

Non-QM mortgages are portfolio loans offered at Gustan Cho Associates. One of the frequently asked questions is can you get a new mortgage with late payments? Mortgage underwriters review how recent late payments may have the borrower’s ability to repay their new mortgage loans. Click here to buy house with late payment 

Can You Sell Your House if You Have Missed Payments?

Whether or not you can sell your house if you have yet to make payments depends on several factors, including the specifics of your mortgage agreement, the policies of your lender, and applicable laws in your jurisdiction. Here are some considerations:

1. Foreclosure Status: If you have missed mortgage payments, your lender may initiate foreclosure proceedings. The process of foreclosure may differ depending on the location and the lender. However, it usually gives the lender the right to acquire the property to compensate for the unpaid debt. If your house is in foreclosure, selling it can be more complicated, but it may still be possible, depending on the stage of the foreclosure process.
2. Lender Approval: Even if you are behind on payments, you may still be able to sell your house with your lender’s approval. However, the lender may require you to pay off the outstanding balance before the sale proceeds. Alternatively, they may agree to a short sale, where the house is sold for less than the amount owed on the mortgage, with the lender agreeing to forgive the remaining debt.
3. Equity: If you have significant equity in your home (the home’s value minus the amount owed on the mortgage), you can sell it to cover the missed payments and any other associated costs. However, if you owe more than the home is worth (known as being “underwater” or “upside down” on the mortgage), selling the house may not be feasible without the lender’s cooperation.
4. Legal Implications: Selling a house with missed payments can have legal implications, especially if the sale proceeds are insufficient to cover the outstanding debt. You should consult a real estate attorney to understand your rights and obligations in such a situation.
5. Credit Impact: Failing to make mortgage payments can adversely impact your credit score, making it challenging to sell your property or secure financing for a new one. However, selling the house before foreclosure proceedings are completed may have a less severe impact on your credit than allowing foreclosure.

Selling your house when you have missed payments can be complex and may require cooperation from your lender. It’s essential to understand your options, consult with professionals, and carefully consider the potential consequences before making any decisions.

Benefits Of Non-QM And Alternative Financing Programs

There are many benefits of going with Non-QM Loans. There are no mandatory waiting period requirements after bankruptcy and/or housing event (foreclosure, deed in lieu of foreclosure, short-sale). There are no maximum loan limit caps on Non-QM Mortgages. Late payments in the past 12 months are allowed. Non-QM loans require a 10% to 30% down payment on a home purchase.

Self-employed borrowers can qualify for bank statement loans with no income tax returns required. 12 months of bank statements are averaged to calculate monthly qualified income. Non-QM loans credit score requirements are FICO scores down to 500 FICO allowed. No private mortgage insurance required is required on non-QM loans.

Non-QM Loan Approval With Mortgage Late Payments in the Past 12 Months

Buying house after selling home with late payments is possible with non-QM loans. Non-QM mortgages is the best mortgage option for buying house after selling home with late payments. Late mortgage payments in the past 12 months are allowed on Non-QM Mortgages. Credit disputes during the mortgage process are allowed and do not have to be retracted. No pre-payment penalty on owner-occupant Non-QM Loans.

Non-QM Mortgage Rates are higher than government and/or conforming rates. However, since there is no pre-payment penalty, borrowers can use Non-QM Loans as a bridge loan until they can refinance it to a conforming mortgage.

For more information about the contents of this article and/or other mortgage-related topics, please contact us at Gustan Cho Associates at 800-900-8569 or text us for a faster response. Or email us at alex@gustancho.com. Get approval for a Non-Qm Loan with late payment

FAQ: Buying House After Selling Home With Late Payments

1. Is it possible to buy a house after selling a home with late payments? Yes, it is possible. However, late payments on your sold home can create challenges when qualifying for a new mortgage.

2. Can you qualify for a new mortgage with late payments on your credit history? Yes, borrowers with late payments, even within the past 12 months, may still qualify for a mortgage, especially with Non-QM (Non-Qualified Mortgage) loans. These loans are tailored for borrowers with unique financial situations.

3. How does the Automated Underwriting System (AUS) affect approval? All government and conventional loan applications go through AUS. An “Approve/Eligible” finding means automated approval, while “Refer/Eligible” may require manual underwriting. If you can secure an “Approve/Eligible” finding, even with one or two recent late payments, you have a better chance of approval.

4. How far back do mortgage lenders look at late payments? Mortgage lenders typically review your credit history spanning the past seven years. Recent late payments, particularly within the past 12 to 24 months, carry more weight than older ones.

5. What options exist for those with late payments seeking to buy a house? Non-QM loans offer flexibility, allowing late payments within the past 12 months. These loans cater to borrowers with unique circumstances and may be a viable option for those with recent late payments.

6. Can you sell your house if you have missed payments? Selling a house with missed payments is possible, but it depends on various factors, including your lender’s policies, equity in the home, and legal implications. If you plan to borrow money for a real estate purchase, consulting a real estate attorney might be helpful. This can help you better understand your rights and responsibilities as a borrower.

7. What are the benefits of non-QM loans? As a borrower, consider Non-Qualified Mortgage (Non-QM) loans. As a borrower, you may benefit from certain loan programs that do not require mandatory waiting periods after bankruptcy or housing events, have flexible credit score requirements, and do not require private mortgage insurance. They provide options for borrowers who may not qualify for traditional mortgages.

8. How can I get more information or assistance regarding buying a house after selling a home with late payments? For more information or assistance on this or other mortgage-related matters, contact Gustan Cho Associates at 800-900-8569 or email alex@gustancho.com.

This mortgage guide on Buying House After Selling Home With Late Payments was updated on April 1st, 2024.

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