Refinancing Guidelines With Late Payments In The Past 12 Months

This article covers Refinancing Guidelines With Late Payments In The Past 12 Months

Mortgage Rates have been sliding since the beginning of 2019.

  • Rates are now at the lowest level it has been in the past 36 months
  • The Federal Reserve Board has announced they will be cutting interest rates
  • Interest Rate Cuts by the Feds means lower mortgage rates
  • Mortgage Rates were in the highest levels since the 2008 Great Recession and Real Estate Collapse in 2018
  • Most homeowners who closed their home loans in 2018 at rates over 5.0% should be able to get a net tangible benefit with refinancing now
  • Homeowners need to meet general Refinancing Guidelines
  • Refinancing Guidelines is different depending on the loan program

Refinancing Guidelines And Net Tangible Benefits

What are the refinancing guidelines and the measurable net benefits

Most homeowners refinance their current mortgages to lower their monthly housing payments.

  • This is done by refinancing their current mortgage with a new home loan at a lower mortgage rate
  • Refinancing their mortgage to a lower rate loan can save homeowners tens of thousands of dollars over the course of a 30-year fixed-rate mortgage

However, there are other reasons why homeowners need to refinance.

Reasons To Refinance 

Here are other reasons why homeowners need to refinance their loans besides to lower their mortgage rates:

Refinancing an adjustable-rate mortgage to a fixed-rate mortgage.

VA And FHA Refinancing Guidelines With Bad Credit

What are the guidelines for refinancing VA and FHA with bad credit

VA and FHA Loans have a streamlined refinance mortgage program where there is no appraisal and/or income docs required.

  • Borrowers with either an FHA and/or VA Loan can do an FHA and/or VA Streamline Refinance with limited documentation
  • The only requirement is they have been timely on their current loan for the past 12 months
  • Borrowers can have late payments on any other credit tradelines with the exception of their mortgage
  • One 30-day late payment in the past 12 months is allowed
  • Streamlines often close in two to three weeks
  • No appraisal is required
  • No income docs are required
  • Credit Scores are used to price out mortgage rates
  • The higher the borrower’s credit scores, the lower the mortgage rates
  • There is no cost on streamlines

Borrowers often get to skip one or two monthly mortgage payments after they streamline.

Can Borrowers Refinance With Late Payments In The Past 12 Months

Lenders allow prior bad credit when qualifying borrowers for a mortgage.

  • Borrowers can have late payments, collections, charged-off accounts, prior bankruptcy and/or housing event
  • However, borrowers do need timely payments in the past 12 months to get an approve/eligible per automated underwriting system (AUS)
  • However, the key question is having timely payments in the past 12 months
  • One or two late payments in the past 12 months is not always a deal killer
  • Multiple late payments in the past 12 months is often a deal killer

Lenders understand borrowers may have extenuating circumstances in the past. However, lenders do need to see that borrowers have re-established themselves and have been timely in the past 12 months.

Qualifying For Mortgage With Late Payments In The Past 12 Months

Is it possible to qualify for a late payment mortgage within the last 12 months?

Borrowers who had late payments in the past 12 months can qualify for a mortgage with Non-QM Loans. There is no waiting period after bankruptcy, foreclosure, deed in lieu of foreclosure, short-sale with Non-QM Loans. There is no private mortgage insurance required with Non-QM Loans. No maximum loan limit. 10% to 20% down payment is required. Non-QM Mortgage Rates are higher than government and conventional loans. Non-QM Loans can be used as a bridge loan for borrowers with late payments in the past 12 months. Once borrowers have been timely and get their credit re-established, borrowers can refinance the Non-QM Loans to a traditional mortgage with lower rates and terms. For more information about the content of this article and/or other mortgage-related topics, please contact us at Gustan Cho Associates at 262-716-8151 or text us for a faster response. Or email us at gcho@gustancho.com.

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