Preparing For Mortgage After Bankruptcy And Foreclosure
This BLOG On Preparing For Mortgage After Bankruptcy And Foreclosure Was UPDATED On January 2nd, 2019
If you had a prior bankruptcy, foreclosure, deed in lieu of foreclosure, or a short sale, there is a mandatory waiting period before a mortgage borrower can qualify for a home loan.
- Waiting period for a bankruptcy is two years from the discharge date of the bankruptcy to qualify for FHA Loans, VA Loans, and USDA Loans
- Waiting periods after foreclosure, deed in lieu of foreclosure, and short sales is 3 years from the recorded date on foreclosure and deed in lieu of foreclosure and the date of the HUD on short sales on FHA and USDA Loans and 2 years on VA Loans
- Waiting period is one year after bankruptcy, foreclosure, deed in lieu of foreclosure, and short sale if you qualify for the new HUD’s Back to Work Extenuating Circumstances FHA mortgage program:
- This was true as long as you can document that the borrower had an economic event that caused your bankruptcy, foreclosure, deed in lieu of foreclosure, or short sale that was a result from being unemployed or getting an income reduction of your wages of at least 20% for six months prior
- and it was beyond their control (FHA Back To Work has been discontinued)
Preparing For Mortgage After Bankruptcy And Foreclosure For Home Buyers
While going through the waiting period, home buyers are not allowed to put in an offer on a home until after the waiting period is officially over.
- Home buyers cannot start an official mortgage application until after they have a signed official real estate purchase contract by the seller and the mortgage loan originator has run an official mortgage credit report
Advice In Preparing For Mortgage After Bankruptcy And Foreclosure
Those who recently went through a bankruptcy, foreclosure, deed in lieu of foreclosure, or short sale, there are plenty of things they can do while waiting out your waiting period to qualify for a residential mortgage loan.
- First thing is to consult with a lender they would like to work with and have them create a soft file
- Although a lender cannot process and underwrite mortgage loan application, most professional mortgage lenders will have mortgage applicants apply for a mortgage application and run a credit report on borrowers
- They will create a soft file like he or she is processing mortgage loan to see Preparing For Mortgage After Bankruptcy And Foreclosure
- Use this waiting period to make changes to credit and financial profile
- Lender might want applicant to establish more credit by advising to get secured credit cards to establish the necessary required credit tradelines required by many lenders
- He will probably advise to pay rental payments with checks so rental verification can be verified
- If you have outstanding judgments, he might want you to get a payment agreement with your judgment creditor and get a payment plan
- Same goes for any outstanding tax liens
- You can qualify for a mortgage loan with judgments and tax liens but need to have a payment agreement and a payment plan in force