When it comes to applying for a mortgage, most options have a seasoning period (waiting period) before you will qualify for that particular home loan. For example, conventional loans have a 7 year waiting period, FHA has a 2 year waiting period, Rural Development is 3 years and VA can be as little as 1. However, there are times where the waiting period may be less due to circumstances beyond the borrowers control.
Recently I spoke to a client that’s spouse passed away. This left her with a lot of his business debt that was an unreasonable amount to pay. This forced her to have to file for bankruptcy. This borrowers credit was exceptional prior to the bankruptcy and had an upper 600 credit score when I reviewed their credit report. Both FHA and Rural Development allow as little as 1 year from the bankruptcy discharge date (chapter 7) with circumstances such as this that are beyond the borrowers control.
When she contacted me, she stated that she had spoke to other lenders that told her she had to wait. I gathered her information and took it to one of our underwriters to investigate. She met all other qualifications with the exception of not meeting the 3 year waiting period for a Rural Development loan. I am happy to say that we are able to assist this borrower since she is 1 year beyond the bankruptcy and she is able to purchase a new home for her and her children.
If you’ve had a situation in the past that you believe is beyond your control, make sure to let your lender know this and if they have told you there are no exceptions, maybe get a second opinion to make sure you cannot qualify now rather than wait for the end of the seasoning period.
For further information about Michigan mortgage loan options or to provide your scenario for review, please contact me at the information below.
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