Waiting Period After Loan Modification To Qualify For FHA Loan

This Article Is About The Waiting Period After Loan Modification To Qualify For FHA Loan

A home loan modification is when a mortgage lender will agree to change the terms of the original mortgage loan in order to lower borrowers monthly mortgage payment. Reasons why lenders offer modifications is because borrowers are not able to afford their current housing payment. This is due to a reduction of income. Or due to borrowers falling so far behind on their mortgage payments that they need the help of the lender for a workout. Lenders offer to modify a homeowners original mortgage because they do not want the property and avoid foreclosure. There are various different types of restructuring plans.

In this article, we will discuss and cover Waiting Period After Loan Modification To Qualify For FHA Loan.

What Is Loan Modification?

What Is Loan Modification?

Loan Modification is a workout between homeowner and lender. Borrower needs to be employed and have source of income. A modification is offered to borrower where the lender offers a lower housing payment in lieu of foreclosure.

The terms can be the following:

  • It can be forgiving the amount owed
  • It can be adding the amount the borrower is behind on to the balance of the loan
  • It can be discounting the loan balance
  • It can be extending the term of the loan term
  • It can be reducing the original mortgage rate to reduce the monthly mortgage payment in order to avoid foreclosure

Is There A Waiting Period After Modification?

Homeowners can sell their home and qualify for a new FHA Loan one year after a loan modification.

Many folks wonder if there is a Waiting Period After Loan Modification:

  • There are mandatory waiting periods after a bankruptcy
  • There are waiting period after foreclosure to qualify for a mortgage
  • There is a waiting period to qualify for a mortgage after a deed in lieu of foreclosure
  • There are also waiting period to qualify for a mortgage after short sale
  • Waiting period after a mortgage has been restructured and modified varies among the different lenders due to their lender overlays
  • Many mortgage lenders view a modification the same as a foreclosure

Timely Payments In Past 12 Months

Are timely payments in the last 12 months valid?

Many lenders do have mortgage lender overlays on waiting period after a mortgage modification. However, mortgage lending guidelines only require that you have been timely on mortgage payments after the finalization of a modified mortgage. 12 months of cancelled checks and a verification of mortgage will be required to qualify for a new mortgage loan after the final modification of mortgage loan. There are many lenders who do have two, three, four year waiting periods. Borrowers seeking a mortgage loan after loan has been restructured, make sure to make timely payments on mortgage payments. Lenders also want to see no late payments after modification and want to see re-established credit.

Qualifying For FHA Loan After Meeting Waiting Period After Loan Modification?

There are cases where homeowners lose their jobs and/or businesses and fall behind on their scheduled monthly mortgage payments. Many folks modify their home loan in order to avoid foreclosure. For those who had modified their home loan and are back on their feet can qualify for a new mortgage after loan modification. A second home purchase with keeping their existing home as an income property can be done one year after loan modification. It is possible to qualify for a mortgage loan but cannot have two FHA Loans at the same time. Only if relocating due to job transfer that is 100 or more miles away where it is beyond commuting distance can borrowers have two FHA Loans at the same time. If the modified loan is a Conventional Loan, borrowers can keep that property as a rental and purchase new owner occupant primary property with a FHA Loan. Selling home that they had the loan modification done will be the easiest and simplest.

UPDATE On Qualifying For FHA Loan After Loan Modification

How to qualify for an FHA loan after loan modification

This BLOG On Qualifying For A FHA Loan After Loan Modification was revised on May 22nd, 2020 by Gustan Cho Associates Mortgage Group. GCA Mortgage Group is a national mortgage company licensed in multiple states with a national reputation for its no lender overlays on their government and conventional loan programs and its 21 day closing on all home closings.

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