Recovering from a major credit event

The current economic climate has put turmoil in the lives of many citizens.  If you have had to choose between paying a bill or buying food, you are not alone.  Based on current data, it appears positive affects from Economic Stabilization are starting show.  If you have been affected by the poor economy and are now looking to buy a home, below are some general ideas of how long to wait after a major event impacted your credit.  Please note, it is not a guarantee if you wait the appropriate time that you will be granted funds to buy a home, they are just general rules that most Government Lenders - Underwriting Guidelines adhere to.

Bankruptcy – Most lenders require a minimum of 2 -4 years after the discharge of the bankruptcy along with re-established credit.  “Re-established credit” refers to to a minimum of 3 accounts reporting to the credit bureau reflecting no late payments, and the trade lines are provided a minimum of 12 months worth of payments.  All three Credit Bureaus will need to reflect a good credit score (680 or higher would be desired). 

Foreclosure Sale – Most lenders will require a minimum of 3 – 4 years from the transfer of title of the foreclosed property.  Written evidence will need to be provided to validate the foreclosure was beyond the borrower’s control.  Re-established credit with 3 or more trade lines with a minimum of 12 months worth of history, along with a good credit score (680 or higher would be desired).

Late Payments – Most lenders require that there be no more than 2 payments that are 30 days late within the most recent 12 months.  The borrower would have to explain and validate the late payment(s) were beyond their control.  There can be no more than 1 payment that is 60 days late within the most recent 24 months.  A good credit score would need to be reflected by all three Credit Bureaus (680 or higher would be desired).

The regulations and guidelines for mortgage lending tend to change quite often to adapt to National Economic Data, so please give me a call when the time is right to review your current situation.