Can I Qualify For Mortgage With Late Payments And Bad Credit

Can I Qualify For Mortgage With Late Payments And Bad Credit

This BLOG On Can I Qualify For Mortgage With Late Payments And Bad Credit Was UPDATED On December 15th, 2018

Can I Qualify For Mortgage With Late Payments And Bad Credit

Can I Qualify For Mortgage With Late Payments: Late payments are not viewed favorably by mortgage underwriters when they underwrite a borrower’s mortgage application.

  • Can I Qualify For Mortgage With Late Payments And Bad Credit After Bankruptcy?  
  • Can I Qualify For Mortgage With Late Payments And Bad Credit After Foreclosure?
  • Do I need to have been timely on all of my payments in the past 12 months?

Common Questions By Home Buyers With Bad Credit

Common Questions By Home Buyers With Bad Credit

These are common questions that I get asked daily by borrowers.

  • It is perfectly understandable for a person to have gone through periods of bad credit due to extenuating circumstances
  • However, the mortgage underwriter would want to know if the period of bad credit is over
  • Underwriters need to feel confident will the mortgage applicant be able to pay their mortgage payments on time
  • Meeting the minimum credit score requirement and debt to income ratio requirements is not a guarantee for a mortgage loan approval

Automated Underwriting System

Automated Underwriting System

The Automated Underwriting System will thoroughly analyze the borrower’s overall payment history that is posted on their credit report.

  • All late payments require a letter of explanation
  • Late payments are not always deal killers
  • There are many extenuating circumstances where late payments are inevitable
  • A good letter of explanation can explain the reason for the late payments

Payment History Of Past 12 Months

Payment History Of Past 12 Months

Mortgage underwriters consider payment history an indicator on the mortgage loan borrower’s ability to pay his or her future monthly mortgage payment in time.

  • Borrowers who had one or two late payments in the past, the chances are they can be overlooked
  • However, if those who had a history of late payments in the past, the chances are that mortgage loan application will get denied
  • History of late payments are viewed by creditors as financial irresponsibility and that the borrower will most likely be late in his or her future credit obligations
  • Almost all mortgage lenders will not want to approve a mortgage loan borrower who has been late on any monthly credit payment in the past 12 months

Late Payments After Bankruptcy And Foreclosure

Late Payments After Bankruptcy And Foreclosure

Majority of lenders will not accept any mortgage applicants that had a late payment after bankruptcy and/or housing event.

Housing events are the following:

  • Foreclosure
  • Deed In Lieu Of Foreclosure
  • Short Sale
  • Loan Modification

However, late payments after bankruptcy and/or housing event is not a federal mortgage guideline. Late Payments after bankruptcy and/or housing events are mortgage lender overlays imposed by individual lenders. Good news is that The Gustan Cho Team at Loan Cabin Inc. is a direct lender with no overlays on government and/or conventional loans. As long as borrowers get an approve/eligible per Automated Underwriting System Findings with late payments after bankruptcy and/or housing event, Gustan Cho Associates Mortgage Group can do the loan.

  • Mortgage lenders do not want to see any late payments after a bankruptcy, foreclosure, deed in lieu of foreclosure, or short sale
  • A few recent late payments with multiple creditors will definitely be a mortgage loan denial
  • Borrowers who had a recent 30 day late payment, the chances are that they need to wait a minimum of six months before any mortgage lender will approve mortgage loan application
  • Unless there is a good excuse where the late payment was not caused by borrower or an extenuating circumstance that the payment was paid late
  • The amount of the late payment does not matter
  • It can be a $5 dollar payment or a $1,000 mortgage payment
  • The credit impact and damage is the same

Can A Bad Credit Mortgage Lender Help Me?

Can A Bad Credit Mortgage Lender Help Me?

Over 75% of our borrowers at The Gustan Cho Team at Loan Cabin Inc. are borrowers who have gotten a mortgage denial from banks, mortgage bankers, and credit unions due to their lender overlays. Borrowers who have prior bad credit including open collections and credit scores under 600  who need to qualify for mortgage can contact us at 262-716-8151 or text us for faster response. Or email us at gcho@loancabin.com. We are available 7 days a week, evenings, weekends, and holidays.

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