Can I Qualify For FHA Loan After Modification?

Qualifying For FHA Loan After Modification

Can you qualify for FHA Loan After Modification? The answer to the question in qualifying for FHA Loan After Modification is yes, however there are certain FHA Guidelines in qualifying for FHA Loan After Modification with regards to credit and mandatory waiting period requirements. A home loan modification is when a homeowners needed to modify their mortgage loan with the help of their mortgage lender to lessen their monthly housing payment due to having a reduction in income where they can no longer afford their current monthly mortgage payments. A mortgage loan modification is granted by a mortgage lender to avoid foreclosure by mortgage lenders. However, the mortgage lender will need to do a full review of the mortgage borrower’s financial and see how stable the borrower’s income is and whether or not the borrower is able to afford a certain amount of monthly payment where they will not encounter financial difficulties after the home loan modification has been finalized and a new payment has been agreed upon. Loan modifications do take some time and mortgage lenders will want to see that the mortgage borrower is employed and the stability of their employment. 30 days of paycheck stubs is required, the borrower’s monthly housing expenses such as utilities, car payments, minimum credit card payments, and other expenses need to be provided to the mortgage lender. The mortgage lender will then calculate the maximum housing allowance the mortgage borrower can afford and see how they can restructure the current mortgage home loan so the borrower will able to afford their mortgage payments.

How Loan Modifications Work

Mortgage lenders are in the business of originating, funding, and servicing mortgage loans and are not in the business of real estate investments. Even though the property is used as collateral, the mortgage lender want to avoid  foreclosing on the property at all available costs. Loan modifications is one alternative to foreclosure for mortgage lenders. There are several ways to structure loan modifications. There are many reasons why homeowners could have afforded their mortgage payments but can no longer afford their home loan payments due to extenuating circumstances. Examples of reasons why families have reduction in income include business loss, job loss, divorce, health reasons, and death in the family. Most folks who seek a home loan modification are normally behind on their mortgage payments. One type of mortgage loan modification is that Mortgage Lenders can forgive the mortgage balance that are in arrears and keep the mortgage payments the same if the mortgage borrower lost his or her job and go a new job making the same amount of money where they can easily afford the current monthly mortgage payments but cannot come up with balance in arrears. A second option the mortgage lender can offer a homeowner in modifying their home loan is to keep the monthly mortgage payments the same but add the balance that is in arrears to the back of the mortgage loan.

A third option mortgage lenders will offer is reducing the mortgage loan borrower’s mortgage interest rates to lower the monthly minimum mortgage payments where the new payment will make it affordable to the homeowner.

A fourth option mortgage companies can offer is discounting the mortgage loan balance and lowering the mortgage interest rate to adjust the monthly principal and interest payments where the mortgage borrower can afford it.

Either way, mortgage lenders will try to find creative solutions in helping a homeowner with modifying their home loans so they can avoid foreclosing on their property.

When Can I Get FHA Loan After Modification?

Home buyers can qualify for FHA Loan After Modification. FHA Loans are for owner occupied primary properties only and not for second homes, vacation homes, and investment homes. FHA Guidelines in qualifying for FHA Loan After Modification require that the home buyer need to wait one year from the date of loan modification and show that 12 months of timely payments have been made. You cannot have any 30 day late payments after loan modification to qualify for FHA Loan After Modification.

Mortgage lenders will also want to see that the mortgage loan borrower has made timely payments on all of his or her credit obligations after the loan modification.

Why Am I Told Different Waiting Periods To Qualify For FHA Loan After Modification

If you are a home buyer who had a mortgage loan modification and want to sell your home that you had the loan modification done and buy another house and were told that you do not qualify until two to four years after your mortgage loan modification, that is because the mortgage lender you have consulted with has waiting period overlays after loan modification. FHA Guidelines to qualify for FHA Loan After Modification clearly states that a borrower can qualify for a FHA Loan one year after loan modification. However, most mortgage lenders will require that you wait four years after loan modification for a FHA Loan. If you were denied for a FHA Loan After Modification for not meeting that mortgage lender’s requirements, contact me at 262-716-8151 or email me at I am a mortgage lender with no lender overlays on FHA Loans, Conventional Loans, VA Loans, and USDA Loans and just follow just the federal lending guidelines. We are available 7 days a week, evenings, weekends, and holidays to take your calls and answer all of your questions.

The information contained on Gustan Cho Associates website is for informational purposes only and is not an advertisement for products offered by The Gustan Cho Team @ Gustan Cho Associates or its affiliates. The views and opinions expressed herein are those of the author and/or guest writers of Gustan Cho Associates Mortgage & Real Estate Information Resource Center website and do not reflect the policy of Gustan Cho Associates Lenders Network, its officers, subsidiaries, parent, or affiliates.

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