Residential Mortgage With Recent Significant Derogatory Credit

The Dale Elenteny Team at Gustan Cho Associates
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This BLOG On Residential Mortgage With Recent Significant Derogatory Credit Was PUBLISHED On January 23rd, 2020

What is the significance of a housing mortgage with the last significant derogation loan?

Home Buyers can qualify for Residential Mortgage With Recent Significant Derogatory Credit at Gustan Cho Associates with our non-qm loan program.

What is recent significant derogatory credit?

Here are examples of Recent Significant Derogatory Credit:

  • Bankruptcy
  • Foreclosure
  • Deed In Lieu Of Foreclosure
  • Short Sale
  • Multiple Housing Late Payments

In this article, we will cover and discuss Residential Mortgage With Recent Significant Derogatory Credit.

How Can Borrowers Qualify For Residential Mortgage With Recent Significant Derogatory Credit

Many borrowers are aware that government and conventional loans require a mandatory waiting period after housing events and/or bankruptcy.

The waiting period after Chapter 7 Bankruptcy is as follows:

  • Two-year waiting period after Chapter 7 Bankruptcy on VA and FHA Home Loans
  • Borrowers can qualify for FHA and VA Loans one year into Chapter 13 Bankruptcy Repayment Period with Trustee Approval
  • Three years waiting period after Chapter 7 Bankruptcy on USDA Loans
  • There is no waiting period after Chapter 13 Bankruptcy discharged date on VA and/or FHA Loans
  • There is a four-year waiting period after Chapter 7 to qualify for conventional loans:
    • Two years after Chapter 13 discharged date
    • Four years after Chapter 13 dismissal date
  • There is a three year waiting period after housing event to qualify for FHA and USDA Loans
  • There is a two-year waiting period to qualify for VA Loans after housing event
  • There is a four year wait period after a deed in lieu and/or short sale on conventional loans
    • There is a seven-year wait period after foreclosure

The great news is there is no waiting period after housing events and/or bankruptcy on non-QM loans.

NON-QM Residential Mortgage With Recent Significant Derogatory Credit

NON-QM Loans are portfolio loans offered by Gustan Cho Associates.

  • NON-QM Loans are not hard money loans
  • Many borrowers often think non-QM loans are hard money loans and do not even have an open mind
  • NON-QM Loans are not just for borrowers with bad credit
  • Many home buyers with great credit often benefit with non-QM loans versus traditional mortgages

Benefits Of NON-QM Mortgages Versus Traditional Financing

What are the benefits of non-QM mortgages compared to traditional financing?

Here are case scenarios where home buyers benefit with non-QM mortgages versus traditional financing:

  • Bank statement loans for self-employed borrowers:
    • No income tax returns required
  • No private mortgage insurance required
  • 95% LTV NON-QM Jumbo Mortgages
  • No maximum loan limits

5% to 20% down payment:

  • Down payment requirements are dependent on borrowers credit scores

Mortgage Rates depend on down payment and down payment by borrowers.

Rising Home Prices

Home values have been increasing nationwide despite rising interest rates.

  • There does not seem to be any signs of a housing market correction
  • Both the FHFA and HUD has been increasing loan limits for the past three years due to rising housing prices
  • Many folks can afford a home but can not qualify for a residential mortgage due to not meeting the mandatory wait period after housing event and/or bankruptcy
  • As time passes, housing prices may increase more where buyers can no longer afford homes
  • With our non-QM mortgages, homebuyers no longer need to meet the mandatory waiting period on government and/or conventional loans

Residential Mortgage With Recent Significant Derogatory Credit Lending Guidelines

NON-QM Loans require a 5% to 20% down payment.

  • The down payment requirement depends on borrowers credit scores
  • For example, Gustan Cho Associates offers 5% down payment full doc non-QM jumbo loans
  • However, 720 credit scores are required
  • Borrowers with 680 credit scores, 10% down payment are required
  • Those with 660 FICO, 15% down payment is required. under 660, 20% down payment is required
  • Borrowers with 500 credit scores, 25% down payment are required
  • Reserves are required
  • Amount of reserves depends on borrowers credit/income profile
  • Debt to income ratios can be up to 50% DTI with compensating factors
  • Mortgage Rates depends on the combination of borrowers credit scores and/or down payment
  • No maximum loan limits
  • No private mortgage insurance required
  • Please contact us at Gustan Cho Associates for more information

We can help borrowers with lower credit scores boost their scores to qualify and get them the best rates possible.

Importance Of Rental Verification And Payment Shock

What is the significance of verification of rent and payment shock

Mortgage Underwriters will be concerned about borrowers’ rental payment history which is called verification of rent and payment shock.

  • For example, if a borrower is paying $2,000 per month on rent and their new PITI on their new mortgage payment is $2,000 per month, there is zero payment shock
  • If the renter is paying $2,000 per month rent and new mortgage payment is $2,200, there is an increase of $200 in new housing payment or 10% payment shock
  • Rental verification is required on a residential mortgage with recent significant derogatory credit

Gustan Cho Associates at Loan Cabin Inc. are direct lenders with no overlays on government and conventional loans. We also offer various non-QM loan programs. Contact us at Gustan Cho Associates at 262-716-8151 or text for a faster response. Or email us at gcho@gustancho.com. Gustan Cho Associates are available 7 days a week, evenings, weekends, and holidays.

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