FHA Loans With Frequent Late Payments On Credit Report

This article on FHA Loans With Frequent Late Payments On Credit Report

Borrowers can qualify for FHA Loans with a prior foreclosure, deed in lieu of foreclosure, short sale, bankruptcy.

Borrowers also can qualify for FHA Loans with outstanding collections and charge off accounts without having to pay them off. However, mortgage lenders will scrutinize borrowers with late payments in the past 12 months. Qualifying for FHA Loans with frequent late payments on the credit report, especially in the past 12 months will become an issue when trying to get an approve/eligible per automated underwriting system (AUS)

Issues With Qualifying For FHA Loans With Frequent Late Payments

Mortgage Agencies and lenders understand consumers may have got into rough patches in their lives.

The 2008 Real Estate and Credit Meltdown devasted many families. Many were left without jobs. Homeowners were left with homes with upside-down mortgages where their loan balance was higher than the value of their homes. Industries disappeared. Many employed in the subprime mortgage market for decades were left jobless. Technology has bankrupted stores like Blockbuster and countless of others. Big box stores like Home Depot and Lowes bankrupted smaller neighborhood mom and pop hardware stores. Others have other extenuating circumstance such as major illnesses, death in the family, loss of family business that often affect their monthly cash flow. When steady cash flow is interrupted, this often causes delays in making monthly payments where it negatively affects consumer credit scores. However, most people recover from a significant financial event. Lenders fully understand significant financial event can happen. However, they do expect consumers have recovered, re-established their credit, and have a steady income. Lenders expect no late payments after a prior significant financial event. This is why most lenders will not accept anyone who had a late payment after bankruptcy and/or foreclosure. They often label consumers who had late payments after bankruptcy and/or foreclosure a second offender and want nothing to do with them.

The good news is that Gustan Cho Associates can help borrowers with late payments after bankruptcy, foreclosure, short sale, deed in lieu of foreclosure.

Barriers For Borrowers With Frequent Late Payments

Borrowers who had a previous history of paying their bills late will be asked the reason for paying late.

Borrowers with a consistent history of paying their bills late will scare off any lender. If a borrower had a late payment history in the past due to job gaps and/or illness, it is fully understandable. However, lenders want to see that the borrower has re-established themselves and has a timely payment history for the past 12 to 24 months. Borrowers who had a history of frequently paying their bills late in the past 12 months will have a difficult time getting an approve/eligible per automated underwriting system (AUS). Also, the file cannot be downgraded to a manual underwrite. This is because all manual underwriting requires timely payment history for the past 24 months. Borrowers who had a history of paying late on their bills may need to wait 12 months of timely payments to qualify for FHA Loans.

Gustan Cho Associates offers Non-QM Loans that allow late payments in the past 12 months. However, non-QM mortgage rates are higher than government and conventional mortgage rates. For more information on this blog or other mortgage topics, please contact us at Gustan Cho Associates at 800-900-8569 or text us for faster response. Or email us at gcho@gustancho.com.