Waiting Period For Mortgage After Bankruptcy And Foreclosure

What Are The Waiting Period For Mortgage After Bankruptcy And Foreclosure:

For home buyers with a prior bankruptcy and/or foreclosure there are mandatory waiting period for mortgage after bankruptcy and foreclosure to qualify for a FHA home loan. With a prior Chapter 7 Bankruptcy, there is a mandatory two year waiting period after the discharge date of the bankruptcy. Most residential mortgage lenders will not allow you to apply for a residential mortgage loan until the two year mandatory waiting period has passed.  Once the mandatory two year waiting period has passed, then the mortgage lender will submit your application and credit report to either Fannie Mae’s DU Automated Underwriting System and/or Freddie Mac’s LP Automated Underwriting System for an automated approval.  If a mortgage application gets submitted prior to the end of the waiting, then the mortgage applicant will not get an automated approval per DU FINDING and/or LP FINDINGS.

Waiting Period For Mortgage After Bankruptcy And Foreclosure Or Deed In Lieu Of Foreclosure

There is a mandatory 3 year waiting period after the recorded date of a foreclosure or deed in lieu of foreclosure to qualify for a FHA insured mortgage loan.  Once the mortgage loan borrower has completed the three year mandatory waiting period after a foreclosure or a deed in lieu of foreclosure, the mortgage applicant should get an approve/eligible via either Fannie Mae’s Automated Underwriting System and/or Freddie Mac’s Automated Underwriting System.  Waiting period under the three year mandatory waiting period will not get an approve/eligible per DU FINDINGS and/or LP FINDINGS.

Waiting Period After Bankruptcy And Foreclosure And Short Sale

There is a three year mandatory waiting period after the settlement date of the short sale to qualify for a FHA insured mortgage loan.

Can You Qualify For Mortgage Before The Waiting Period?

Home buyers who have not waited their mandatory waiting period can still qualify for a FHA insured mortgage loan via manual underwriting but cannot close on their home until the mandatory waiting period has passed.  For example, if a home buyer’s waiting period after a bankruptcy is not up until November 2014 and we are at June 2014, the home buyer can get pre-approved for a home purchase and get the home under contract.  The mortgage lender will process and underwrite the mortgage loan application but the home buyer cannot close until November 2014 when the waiting period is over.

Manual Underwrite

Since mortgage applications for those who have not waited their mandatory waiting periods will not get an automated approval, these mortgage applications are manually underwritten.  There is a price adjustment for a manual underwrite which means a slightly higher interest rate, however, it will enable the home buyer to have the home process done sooner and the minute their waiting period is over, they will be able to move in their home sooner.

Gustan Cho

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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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