Mortgage Waiting Period After Significant Derogatory Credit Event

The presence of a Significant Derogatory Credit Event on a borrower’s credit report represents a significantly high level of default risk to any mortgage lender.

Examples of Significant Derogatory Credit Events include:
♦  Bankruptcies
♦  Foreclosures
♦  Short Sales
♦  Deed-in-Lieu of Foreclosure
♦  Mortgage Loan Charge-Off

With the Spring 2016 Home Buying season upon us, I’ve been getting calls from prospective buyers and their realtors asking how long they  have to wait after one of these Significant Derogatory Credit Events before they could even consider buying a new house. They are called Boomerang Buyers. 

Personally, I hate the term. Boomerang Buyers are former home owners who lost their home as result of the real estate crash and economic recession we experienced in recent years. These new clients have already been home owners; they appreciate the freedom and feeling of self-worth in owning their own home; they understand the process; and they are motivated.

So … Can I help? It depends. This is the waiting period or Seasoning before one can consider buying a new home following any one of these Significant Derogatory Credit Event:

FORECLOSURE
   Conventional Loans – 7 years
   FHA – 3 years
   USDA – 3 years
   VA – 2 years

BANKRUPTCY
   Conventional
      Chapter 7 or 11 – 4 years
      Chapter 13 – 2 years from discharge or 4 years from dismissal
      Multiple Bankruptcies within 7 years – 5 years
   FHA – 2 years
   USDA – 3 years
   VA – 2 years 

SHORT SALE OR DEED-IN-LIEU
   Conventional – 4 years
   FHA – 3 years
   USDA – 3 years
   VA – 2 years

Families in this predicament may be ashamed, frightened that they will never be able to own a home again, and wonder who will ever give them a mortgage again…the list of feelings is endless.

If you know anyone in this kind of situation,send them my way. I‘m here to help.