Have Bad Credit? General Waiting Periods Based on Loan Type

loan_application_clip_art_24699Have bad credit?  There several types of derogatory items (i.e. foreclosure, short sales, deed-in-Lieu, and Bankruptcy) that can affect your chances of getting a loan.  We have paraphrased a portion or quoted verbatim information supply by FBC Mortgage (which is a preferred vendor for Keller Williams Realty.  Some of these items are summarized as follows:

Foreclosure – Property is given back to the bank due to the borrower ‘s failure to keep up mortgage payments.

  1. Conventional Loans – Seven years based on Standard Agency Guideline from completion date of foreclosure reported on credit report or foreclosure.
  2. FHA Loans (Determined by Date of Case Number) – Three years from the date of foreclosure was completed and transferred back to the bank.
  3. VA Loans (Determined by Date of Application) – Two years from the date the foreclosure was completed and transferred back to the bank.
  4. USDA Loans (Determined by Date of Credit Approval) – Three years from the date the foreclosure was completed and transferred back to the bank.

Short Sale – Home sold at a sales price that does not cover the debts secured by liens against the property.

  1. Conventional Loans – Four years based on Standard Agency Guideline from completion date as reported on credit report or other documents provided by borrower regardless of LTV.
  2. FHA Loans (Determined by Date of Case Number) – Three years from the date sale closed and transferred to new owner.
  3. VA Loans (Determined by Date of Application) – Two years from the date sale closed and transferred to new owner.
  4. USDA Loans (Determined by Date of Credit Approval) – Three years from the date sale closed and transferred to new owner.

Deed-in-Lieu – Home returned to lender to satisfy a loan that is in default and avoid foreclosure proceedings.

  1. Conventional Loans – Two years based on possible but unlikely, extenuating circumstances (i.e. nonrecurring events that are beyond the borrower’s control and result in a sudden, significant, and prolonged reduction in income or a catastrophic increase in financial obligations)
  2. FHA Loans (Determined by Date of Case Number) – Three years from the date sale closed and transferred to new owner.
  3. VA Loans (Determined by Date of Application) – Two years from the date the foreclosure was completed and transferred back to the bank.
  4. USDA Loans (Determined by Date of Credit Approval) – Three years from the date the foreclosure was completed and transferred back to the bank.

Bankruptcy Chapter 7 (Liquidation) – Debts discharged through Bankruptcy, which the client does not pay any debts owed.

  1. Conventional Loans – Four years based on Standard Agency Guideline from discharge/dismissal date with re-established credit.
  2. FHA Loans (Determined by Date of Case Number) – Two years from date of discharge with re-established credit paid as agreed or no new credit obligations incurred.
  3. VA Loans (Determined by Date of Application) – Two years from date of discharge.
  4. USDA Loans (Determined by Date of Credit Approval) – Three years from date of discharge with re-established credit paid as agreed or no new credit obligations incurred.

Bankruptcy Chapter 13 (Reorganization) – Debts (or at least a portion) are paid back on a monthly scheduled payment plan by client.

  1. Conventional Loans – Four years based on Standard Agency Guideline from discharge date with re-established credit.  Four years based on Standard Agency Guideline from dismissal date with re-established credit.
  2. FHA Loans (Determined by Date of Case Number) – Two years from date of discharge.
  3. VA Loans (Determined by Date of Application) – One year payout period under bankruptcy has elapsed and the borrower’s payment performance has been satisfactory and all required payments made on time and the judge or trustee approval is required.
  4. USDA Loans (Determined by Date of Credit Approval) – One year payout period under bankruptcy has elapsed and the borrower’s payment performance has been satisfactory and all required payments made on time and written approval from the courts to enter into a mortgage transaction.

Thinking of buying or selling real estate?

KW1784102f20KW_thumb.jpgYou should consider using a realtor.  If you are interested in buying real estate (new home, existing home, or commercial property), please contact me (Alan Lane with Keller Williams Realty at 2119 W Brandon Blvd, Brandon, Florida  33511).  As a life long resident of Central Florida, I can help you find the right property for you whether it is in Lakeland or as far south as Sarasota.  The Keller Williams offices of  ”Suburban Tampa” include the offices in Brandon, Plant City, Fishhawk Ranch, and our newest office in Valrico.  My email address is alanlane66@gmail.com, or call me at 813.205.9280.  If you are just starting your search, you can search the MLS for real estate opportunities on my website at this link.

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