This BLOG On FHA Guidelines On Mortgage After Loan Modification Was UPDATED And PUBLISHED On February 8th, 2020
FHA Guidelines On Mortgage After Loan Modification for new home buyers require a one year mandatory waiting period.
- FHA Guidelines On Mortgage After Loan Modification applies for both FHA purchase loans as well as FHA refinance loans
- However, most homeowners who had a mortgage loan modification often get a reduced mortgage interest rate
- Some even as low as a 2% mortgage interest rate
- It is often rare to see a rate and term refinance mortgage after a mortgage loan modification
- However, FHA mortgage loan borrowers can refinance with an FHA cash-out refinance mortgage
- Home Buyers who had a prior loan modification can now qualify for an FHA Loan after loan modification
- Need to meet the mandatory waiting period of 12 months after the loan modification
- Also need to meet other credit requirements under FHA Guidelines On Mortgage After Loan Modification
In this article, we will discuss and cover HUD Guidelines after a loan modification to qualify for FHA loans.
FHA Guidelines On Mortgage After Loan Modification And Credit Requirements
A mortgage loan modification is when a homeowner asks their mortgage lender to change the terms of their current mortgage loan. This change reduces their monthly mortgage payments because they can no longer afford the mortgage payments they currently have.
- There are many reasons why homeowners request a loan modification
But the most common reason for loan modification requests is due to unemployment and/or underemployment and other extenuating circumstances such as the following:
- health issues
- death in the family
- loss of employment
- loss of business and major reduction of income
Requesting A Loan Modification Versus Foreclosure
Borrowers with extenuating circumstances who feel they cannot make mortgage payments, contact the current lender immediately before going in arrears:
- Lenders will work with homeowners and can plan a forbearance or loan modification
- Lenders do not want borrowers home, no matter how much equity they have
- To qualify for a loan modification, homeowners need to be employed
- The mortgage lender will want to see financials, especially what the borrower is currently making and how much in housing payments they can afford
- The loan modification division of mortgage company will thoroughly review financials and current mortgage status
- The lender may decide borrower is a great candidate for a loan modification
- Once approved for a loan modification, the mortgage loan originator can present several programs that are best tailored to the homeowner
They may decide to put the amount behind on the back of the mortgage balance.
Types Of Repayment Plans
The lender can lower mortgage payments and mortgage interest payments and extend the term of the loan:
- Or they may decide to forgive part of the mortgage balance:
- Forgiveness may include the amount borrowers are in arrears and reduce the mortgage interest rate so the monthly payments will be affordable
- Whatever the case, once the lender grants a mortgage loan modification, homeowners can decide to sell anytime and qualify for FHA Loan after 12 months
- There is a one year mandatory waiting period after a loan modification to qualify for FHA Home Loans
- Borrowers need to have made mortgage payments on time for the past 12 months
- No late payments are allowed
Lenders also do not want to see any late payments with any other debts after a loan modification.
Borrowers Who Have Problems Getting Mortgage After Loan Modification
I get so many phone calls by mortgage borrowers who have trouble qualifying for FHA Loan after loan modification due to the mortgage lender overlays.
- As mentioned earlier, FHA requires a one year mandatory waiting period to qualify for an FHA Loan after loan modification
- Borrowers need to have been timely with all of their payments in the past twelve months after the loan modification
- However, many mortgage lenders have their own waiting period after loan modification requirements
- Some require two years after a loan modification
Others require a four year waiting period after loan modification for a mortgage loan borrower to qualify.
Qualifying For FHA Loan With Direct Lender With No Overlays
Borrowers who were told they do not qualify for an FHA Loan after loan modification by other lenders, no worries. Contact us at Gustan Cho Associates at 262-716-8151 or text us for a faster response. Or email us at email@example.com. We have no mortgage lender overlays on FHA Loans after loan modification. Gustan Cho Associates Mortgage Group has zero lender overlays on FHA Loans, VA Loans, USDA Mortgages, and Conventional Loans. We are also correspondent lenders on non-qm loans and bank statement loans for self employed borrowers.