Getting a Mortgage Loan After Financial Hardship

Many people go through financial hardship at some point in their lives, and that can have negative effects on other aspects of life. In some cases, financial hardship can lead to bankruptcy, foreclosure or a short sale. Unfortunately, this can make it more difficult to obtain a new mortgage loan at the Lake of the Ozarks, even after you have your financial situation under control again. Most people think they have to wait at least 7 years before they can apply again, but this isn't necessarily the case anymore. Keep reading to learn about the 2018 guidelines for various types of mortgages.

2018 FHA Guidelines

For an FHA loan, the following guidelines must be met before you can apply for a home loan after a financial hardship:

• Bankruptcy - 2 year waiting period after discharge of a Chapter 7 Bankruptcy or 1 year waiting period after discharge of a Chapter 13 Bankruptcy (Be sure not to confuse the discharge date with the date the bankruptcy was filed).  
• Foreclosure - 3 year waiting period after the sale/deed transfer date. 
• Short Sale / Deed in Lieu - 3 year waiting period after the sale/deed transfer date. 

In addition to the above waiting periods, you much have re-established your credit, with no late payments in the past 12-24 months, depending on the type of hardship. 

2018 VA Guidelines 

For a VA loan, the following guidelines must be met before you can apply for a home loan after a financial hardship: 

• Bankruptcy - 2 year waiting period after a Chapter 7 Bankruptcy. For a Chapter 13 Bankruptcy, if you have finished making all payments satisfactorily, the lender may conclude that you have re-established satisfactory credit. If you've satisfactorily made at least 12 months' worth of the payments and the Trustee or Bankruptcy Judge approved of the new credit, the lender may give favorable consideration. 
• Foreclosure / Deed in Lieu - 2 year waiting period after the sale/deed transfer date. 
• Short Sale - The VA does not recognize a short sale as a derogatory event. Therefore, if you are able to credit qualify for a VA loan, the short sale would not prevent you from being eligible. 

In addition to the above waiting periods, credit must be re-established, with a minimum 620 credit score. 

2018 USDA Guidelines 

For a USDA loan, the following guidelines must be met before you can apply for a home loan after financial hardship: 

• Bankruptcy - 3 year waiting period after the discharge of a Chapter 7 or 13 Bankruptcy. 
• Foreclosure - 3 year waiting period after the sale/deed transfer date. 
• Short Sale / Deed in Lieu of Foreclosure - If you had big issues, the deed in lieu of foreclosure will be viewed as a foreclosure and you would want to wait no less than 3 years if the score is under 640.  If you have a credit score over 640, you may be able to apply after 1 year. 

2018 Conventional Loan Guidelines 

For a conventional loan, the following guidelines must be met before you can apply for a home loan after financial hardship: 

• Bankruptcy - 4 year waiting period after your Chapter 7 Bankruptcy has been discharged. For a Chapter 13 Bankruptcy, there is a 2 year waiting period. 
• Foreclosure - 7 year waiting period after the sale date of your foreclosure. 
• Short Sale / Deed in Lieu of Foreclosure - 4 year waiting period from the date your name was removed from the title for a short sale or deed in lieu not included in a bankruptcy.

In addition to the above waiting periods, credit must be re-established, with a minimum of 620 credit score. Fannie Mae and Freddie Mac have reduced waiting periods in cases of extenuating circumstances. 

If you're concerned about a past financial hardship affecting your current home options, give me a call at 573-746-7211. As your Lake of the Ozarks mortgage lender, I'll work with you to determine your options and offer advice for how to overcome any challenges you may be facing with homeownership at the Lake of the Ozarks.

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Michael Lasson

Senior Loan Officer

NMLS #: 493712

4655 B Osage Beach Parkway

Osage Beach, MO 65065

Direct: (573) 746-7211

Cell: (573) 216-7258

e-Fax: (866) 397-0318

Email: mlasson@fsbfinancial.com

Website: www.YourLakeLoan.com

**The postings on this site are my own and do not necessarily represent First State Bank of St Charles’s positions, strategies, or opinions.