Waitng Period Following Significant Derogatory Credit Event

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

Examples of Significant Derogatory Credit Events include:
♦  Bankruptciesforeclosure
♦  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 boomerang buyerwho 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

confusedFamilies 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.

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