In the past several years many people have experienced a foreclosure, short sale, or bankruptcy. Although a traumatic experience there is still a possibility of owning a home in the following years. Over the next few weeks I will go over some information on how long this derogatory information may stay on your credit file. Each borrower and program is a bit different and the circumstances affect the time line but generally these are the time lines to qualify for a new home loan after a derogatory credit event.
To qualify for a home loan such as a conventional loan, FHA home loan, VA home loan, or a USDA home loan here are the general guidelines. I will start with the conventional loan process and in the next blog touch on each loan type as they are rather extensive.
For aconventional loan (determined by the date of application for the loan) I have broken out the event and the waiting periods below.
NOTE: Must receive an Automated Underwriting System Approval or Eligibility including those with extenuating circumstances.
The home was given back to the bank
7 yearsfrom date foreclosure completed and transferred back to bank if there areNOextenuating circumstances.
3 yearsfrom date of foreclosure completed and transferred back to the bank with acceptable extenuating circumstances and a10% down payment.
Deed in Lieu of Foreclosure
Short sale: Home sold but sales price didn't cover the amount owed.
Deed in Lieu: Home returned to lender in exchange for canceling the loan.
7 yearsfrom date sale close and transferred to new owner or transferred back to bank for less than10% down payment.
4 yearsfrom date sale closed and transferred to new owner or transferred back to bank with10% down payment.
2 yearsfrom date sale closed and transferred to a new owner or transferred back to bank with20% down payment.
2 yearsfrom date sale closed and transferred to a new owner or transferred back to bank possible with extenuating circumstance and10% down payment.
Bankruptcy Chapter 7
Debts are discharged through Bankruptcy, client does not pay any debts owing with the exception of student loans.
4 yearsfrom discharge date
2 years from discharge date possible with acceptable extenuating circumstance.
Bankruptcy Chapter 13
Debts are paid back on a monthly scheduled payment plan by client.
2 years from discharged date
4 yearsfrom dismissal date
Examples of acceptable extenuating circumstances (circumstances must be verified and documented)
Conventional:Nonrecurring events that are beyond the borrower's control that result in a sudden, significant and prolonged reduction in income or a catastrophic increase in financial obligations.
Next time I will touch on FHA loan waiting periods and in the meantime happy blogging.
Source: Article:ThinkBigWorkSmall; The Real Estate Source(pub)
Author:Michael Bray Phone: 915-549-1770 Dated: October 13th 2012 Views: 2,548 About Michael: ...
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