Home Loan With Bad Credit
Many married couples who are seeking a home loan with bad credit are confused when it comes to the mandatory waiting period after foreclosure to qualify for a FHA insured mortgage loan. If you are married and your spouse was the only person on the mortgage note but both you and your spouse were on title and your home was foreclosed on under 3 years ago, you can qualify for a mortgage loan.
When Does Waiting Period Clock Start?
The waiting period after foreclosure does not apply to you since you were not on the mortgage loan that was foreclosed on. You can be currently be living on the home that is being foreclosed on and still qualify for a residential FHA insured mortgage loan as long as you are not on the mortgage note and your spouse is. Many mortgage loan borrowers think that because they are married and they are on title, both people need to pass the mandatory waiting period after a foreclosure.
Mandatory Waiting Period After Foreclosure, Deed In Lieu Of Foreclosure, Short Sale, And Bankruptcy
If you had a prior bankruptcy, foreclosure, deed in lieu of bankruptcy, or short sale, federal mortgage lending guidelines require mandatory waiting period in order for you to be able to re-qualify for a residential mortgage loan. For bankruptcy, there is a mandatory waiting period of two years from the discharge date of the bankruptcy. For a foreclosure, deed in lieu of foreclosure, or short sale, there is a three year mandatory waiting period. As mentioned in the earlier paragraph, if you are married and you are not on the mortgage note but you are on title, the mandatory waiting period does not apply to you. It only applies to the person who is on the mortgage note.
One Year Waiting Period After Foreclosure, Deed In Lieu Of Foreclosure, Short Sale, And Bankruptcy
HUD launched the FHA Back to Work Extenuating Circumstances due to an economic event mortgage program last August 15, 2013 which shortens the mandatory waiting period after foreclosure, deed in lieu of foreclosure, short sale, and/or bankruptcy to a one year waiting period. The Back to Work mortgage program is a great program for first time home buyers who had a recent bankruptcy or those seeking a home loan with bad credit who had a prior foreclosure, deed in lieu of foreclosure, or short sale.
FHA Back To Work Mortgage Requirements
To qualify for the Back to Work mortgage program, the borrower needs to have been out of work, or underemployed for at least six months prior to the initiation of the bankruptcy, foreclosure, deed in lieu of foreclosure, or short sale and had a reduction of at least a 20% reduction of household income. The borrower needs to take a HUD approved housing counseling course and cannot submit a mortgage application until after 30 days later after obtaining the housing certificate. The mortgage loan borrower needs to show that he or she has re-established credit since the economic event.
By Gustan Cho