If you are thinking about buying a home after going through a financial hardship, one thing that you may want to be aware of is that Underwriters will consider your situation differently if you went through an “extenuating circumstance” when you had your hardship.
If you were experiencing an extenuating circumstance during your hardship, lenders may shorten the waiting period that you have to wait after a short sale or foreclosure. In order to qualify for an extenuating circumstance, it must have been out of our control and not due to financial mis-management. In order to qualify for an extenuating cirtumstance exception with underwriting, be ready to show documentation.
Extenuating Circumstances: Examples
While there are many possible examples of extenuating circumstances, a few of the most popular extenuating circumstances include:
- Death of a wage earner
- Medical issues / long term illness
There are also many things that do NOT typically qualify as an extenuating circumstance – some of the popular ones include:
- The recession / bad economy
- Divorce (although there are exceptions to this rule if the spouse was awarded the property and all payments were made on time at the time of the divorce)
- Loss of employment
Waiting Periods With Extenuating Circumstances
The waiting periods after a short sale for getting a mortgage if you qualify for an extenuating circumstance are:
- FHA/VA/USDA – they are the same, these types of loans don’t take into account extenuating circumstances as a reason to shorten the waiting period
- Fannie Mae – 2 years for 90% LTV
- Freddie Mac – 2 years
The waiting periods after a foreclosure or Deed in Lieu for getting a mortgage if you qualify for an extenuating circumstance are:
- FHA – Will vary by Underwriter, but is possible if you can fully document the circumstance and have proven that you can re-establish credit
- Fannie Mae – 3 Years
- Freddie Mac – 3 Years
- VA – 1 Year
- USDA – 3 Years – the same period as without an extenuating circumstance
Because there are so many different situations, if you think you can qualify for an extenuating circumstance, you may be eligible for a mortgage sooner than you think. Speak with a lender who specializes in helping people get qualified for a mortgage after a short sale and can help you in your specific situation. Get matched with a great lender today – submit your information below and get started.
