info about credit events on a credit report

Dated: October 13 2012

Views: 2663

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 a conventional 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.

Foreclosure

The home was given back to the bank

7 years from date foreclosure completed and transferred back to bank if there are NO extenuating circumstances.

3 years from date of foreclosure completed and transferred back to the bank with acceptable extenuating circumstances and a 10% down payment. 

 

Short Sale

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 years from date sale close and transferred to new owner or transferred back to bank for less than 10% down payment.

4 years from date sale closed and transferred to new owner or transferred back to bank with 10% down payment.

2 years from date sale closed and transferred to a new owner or transferred back to bank with 20% down payment.

2 years from date sale closed and transferred to a new owner or transferred back to bank possible with extenuating circumstance and 10% down payment.

 

Bankruptcy Chapter 7

Debts are discharged through Bankruptcy, client does not pay any debts owing with the exception of student loans.

4 years from 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 years from 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)

 

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