Bankruptcy or Foreclosure? You may now be Loan-Worthy!

We’ve been keeping in touch about the record-low interest rates of late… but if you’ve experienced some bumps in the road with bankruptcy or foreclosure, aka a “derogatory event”, you may not think you can take advantage of loan rates at this time.

What you may not realize is that while there are waiting periods for bankruptcy, foreclosures and such, an extenuating circumstance can cut your waiting periods for a new loan up to less than half the time. A job loss, major medical bills, or an accident serious enough to affect your earning power at the time of your derogatory event are all such instances. You’ll need to bring documentation proving financial difficulties beyond your control, but don’t you think you deserve a GOOD break for a change?

Below is a list of Derogatory Events and their waiting periods. See if these start some rethinking.

Bankruptcy – Chapter 7 or 11

Waiting Period:  4 years

with Extenuating Circumstances:  2 years

Bankruptcy – Chapter 13

Waiting Period:  2 years from discharge date or 4 years from dismissal date

with Extenuating Circumstances:  2 years from discharge date or 2 years from dismissal date

Multiple Bankruptcy Filings

Waiting Period:  5 years if you had more than one filing within the past 7 years

with Extenuating Circumstances:  3 years from the most recent discharge or dismissal date

Foreclosure

Waiting Period:  7 years

with Extenuating Circumstances:  3 years but there are additional requirements from 3-7 years.  You’ll need to have a 90% maximum Loan to Value (LTV) ratio; the purchase has to be a principal residence, and there is a limited cash-out refi on any type of occupancy.

Deed-in-Lieu of Foreclosure, Pre-Foreclosure or Short Sale

Waiting Period, 2 years – 80% maximum LTV ratios

Waiting Period, 4 years – 90% maximum LTV ratios

Waiting Period, 7 years – LTV ratios per the Eligibility Matrix

with Extenuating Circumstances:  2 years, 90% maximum LTV ratios

It’s a buyer’s market out there. Let’s see if we can help you get back into the game. Contact us at this link and let’s get you started!

NOTE:  Please keep in mind that the maximum LTV ratios permitted are the lesser of the LTV ratios presented here, or the maximum LTV ratios for the transaction per the Eligibility Matrix. This information is based on rules and regulations issued by federal agencies, but please check with your bank or loan adviser to ensure you meet all requirements and disclosures.