Qualifying For FHA Loan After Loan Modification

This Article On Qualifying For FHA Loan After Loan Modification Was Written By Nicholas Ferrante Of The Gustan Cho Team At CrossCountry Mortgage

What Is a Loan Modification? Homeowners facing a major financial hardship that could lead to a foreclosure may work with a lender to get a loan modification — sometimes called a mortgage modification, workout plan or restructuring — which will change the terms of the mortgage loan so the borrower can afford the payments. Government programs such as HAMP, or Home Affordable Modification Program, are designed to lower your monthly mortgage payments, making them more affordable and sustainable for the long-term. Fannie Mae, Freddie Mac, Federal Housing Administration (FHA), Veterans Affairs (VA), and U.S. Department of Agriculture (USDA) also offer mortgage solutions for homeowners with mortgages they own, insure, or guarantee.

How Does A Loan Modification Help?

Qualifying For FHA Loan After Loan Modification: Loan modifications achieve a more affordable payment by either adjusting your interest rate, extending your term, and reducing or forbearing your principal or any combination thereof. The most common forms of loan modifications have to do with rate and payment restructuring when borrowers are unable to refinance. Another common strategy for mortgage companies is to offer principal curtailment (reduce the amount owed) rather than forgive debt. The difference was repositioned as a lien on the home in the form of a silent second mortgage (a mortgage not disclosed to the original lender), which did not come into play until the home was refinanced or sold. It is important to note here that a loan modification is different from a mortgage refinance. A loan restructuring changes the terms of the original mortgage, whereas a refinance pays off the original mortgage loan in exchange for another. Most homeowners these days are not seeking a loan Page 2 modification, and most banks are not promoting them, as the economy has shifted tremendously from just a few years ago. I’ve had a loan modification in the past.

Will A Loan Modification Hurt My Chances Of Getting A New Mortgage?

Qualifying For FHA Loan After Loan Modification: How does this impact future mortgages? If a modified loan is in your past and you’re looking to take out a new mortgage, then these rules apply to you: —To be eligible, you must have made at least 24 mortgage payments on time since the restructuring was completed. Even if there was a second mortgage in place that was restructured, this same waiting time applies — whether the mortgage is on a primary home, a secondary home or an investment property.

Qualifying For FHA Loan After Loan Modification: Requirements And Guidelines

If you are purchasing or refinancing another property independent of the property that has a restructured loan, a one-year waiting time applies in qualifying for FHA Loan After Loan Modification. There is a four year mandatory waiting period to qualify for Conventional Loan After Loan Modification. What this means… The best outcome to maintain your credit standing is refinancing rather than restructuring. If refinancing is not an option, perhaps due to home equity for example or a heavy debt load, and loan modifying is an option with your current loan servicer, know that you’re going to be limited on your future mortgage options for up to two years.

Loan Modifications And Credit Reports

Additionally, lenders are required to report modified/restructured mortgages on the tri-merge credit report mortgage banks use to make credit decisions. This financial services credit report is how banks find derogatory credit events. Even if you didn’t have any missed mortgage payments, a restructured mortgage can still be a red flag to potential mortgage lenders. If you had a home loan modification in the past few years and you want to buy a new home, it’s a good idea to check your credit reports and credit scores to see how it may have affected your credit, and to see if there are any errors or problems you need to re- Page 3 solve before you apply. You can get your free credit reports from AnnualCreditReports.- com and you can get your credit scores for free from several sources, including Credit.- com.

Qualifying For FHA Loan After Loan Modification By Lender Who Has No Overlays

Conclusion Even if you have paid your dues, had no late payments and your credit scores/reports are great you could potentially still be denied for a residential mortgage loan. Although you may meet every single FHA or Fannie Mae guideline requirements does not guarantee you a mortgage loan approval. The majority of the mortgage lenders in this country have their own overlays which are additional requirements above and beyond FHA and/or Fannie Mae’s minimum lending requirements. **If you have had prior a prior loan modification and bankers/mortgage bankers are giving you the run around, you should seek the services of a mortgage broker instead of a banker or a mortgage banker. A banker or mortgage banker are only limited in dealing with their own mortgage products and cannot broker mortgage loans. A mortgage broker has correspondent relationships with dozens of wholesale lenders and may have a mortgage lender that is the right fit for you. This potential lender might not have overlays or very little overlays that do not apply to you. If you have been denied for a residential mortgage loan, contact us immediately so that we may assist you.

About The Author: Nicholas Ferrante Of The Gustan Cho Team At CrossCountry Mortgage

Nick Ferrante of The Gustan Cho Team Rapid Response Group at CrossCountry Mortgage is the author of Qualifying For FHA Loan After Loan Modification. Nicholas Ferrante of Gustan Cho Associates is a senior writer for Gustan Cho Associates Mortgage Resource Center and a licensed mortgage loan originator for The Gustan Cho Team at CrossCountry Mortgage. Nick is an expert in all areas of lending such as FHA, VA, USDA, and Conventional Loans. Nicholas Ferrante is known by many due to his no lender overlays on both government loan programs and Conventional Loans. Nicholas Ferrante just goes off the automated findings of the Automated Underwriting System. As long as you get an approve/eligible per DU FINDINGS and you can meet the conditions from the AUS FINDINGS, you can pretty much be rest assured that your loan will close with Nicholas Ferrante of The Gustan Cho Team at CrossCountry Mortgage. Over 70% of the borrowers The Gustan Cho Team at CrossCountry Mortgage represents are folks who either got last minute denials by other lenders or could not qualify due to the mortgage lender overlays. The pre-approval stage is the most important phase of the mortgage process. The number one reason why there are last minute mortgage denials is due to a loan officer not being diligent when issuing a pre-approval letter. Nicholas Ferrante is based in the Oak Brook Illinois branch of CrossCountry Mortgage. Nicholas Ferrante and The Gustan Cho Team at CrossCountry Mortgage are available 7 days a week to answer any questions you may have on getting approved for a mortgage loan. You can email us any loan scenario questions at gcho@gustancho.com.

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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