September 27, 2013

Frequently Asked Buyer Questions

How long must I wait?

Bankruptcy


  • FHA – **NEW “Back to Work” Effective 8/15/2013 allows as little as 12 months waiting period after a Chapter 7 bankruptcy discharge. In a Chapter 13, there are some circumstances that could allow a new mortgage after 12 months IN bankruptcy.
  • Conventional – 4 years after Chapter 7 bankruptcy discharge, with extenuating circumstances this may be reduced to 2 years. Chapter 13 bankruptcy is 2 years from the discharge date.
  • VA – Chapter 7 & 13 are both 2 years from the discharge date and may be reduced with extenuating circumstances
  • USDA – 3 year waiting period after Chapter 7 bankruptcy discharge, and 1 year after Chapter 13 discharge.



Foreclosure


  • FHA –**NEW “Back to Work” Effective 8/15/2013 allows as little as 12 months with extenuating circumstances.
  • Conventional – 7 year waiting period, but if there is a deficiency judgment filed as result of the foreclosure, financing may not be available. Deficiency judgments are enforceable for 20 years in FL.
  • VA – 2 year waiting period, but there are restrictions if the foreclosure was a VA loan.
  • USDA – Average wait time is 3 years, but the Underwriter may use discretion if credit has been re-established after 1 year.

Short Sale


  • FHA –**NEW “Back to Work” Effective 8/15/2013 allows as little as 12 months. No waiting period if payments were made on-time up to the date of the sale.
  • Conventional/Fannie Mae – 7 years with <20% down. 10% down is available after 4 years, and 20% down is available after 24 months.
  • Conventional/Freddie Mac – 4 years regardless of down payment
  • VA – 2 year waiting period
  • USDA – Previously required 3 years. But now, assuming credit has been re-established and profile is acceptable, no waiting period is required.

How much home can I afford?

Below is a simple tool for your clients to use when calculating what maximum mortgage payment they can afford. The Total PITI to equate in a loan amount/purchase price will vary from program to program depending on down payment and interest rate. Please contact Amanda for further assistance with this.

Quick Debt-to-Income (DTI) Ratio Tool:

Gross Monthly Income x 45% (average DTI to be at or below)
Deduct Min. Pmts for all monthly debts on credit report (credit cards/, car payment, student loan, etc.)
Final Amount is Total *PITI Allowed
*Principle, Interest, Taxes, Insurance, PMI, HOA
Ex. $5,000 GMI x 45% = $2,250
Minus Min. Pmts of $1,000 =
$1,250 Total PITI Allowed


Provided by: Primary Residential Mortgage, Amanda Benson
Sr. Loan Officer, NMLS#587711