Financing post a modification?

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To give you a bit of background about my situation, my wife and I are looking to buy a multi-family brownstone in North Jersey. We haven’t yet found the home we want to buy, but wanted to get pre-qualified. 

We are both gainfully employed and have earned between $500-600k over the past few years. Our credit scores are both ~700 depending on the agency and have over $700k liquid which we plan to use for a 20-35% down payment as needed.

The only delinquency on my credit report is in regards to a home I co-signed for my mom post her divorce. Unfortunately for me, she entered into a bad loan and could not keep up with her obligations. Subsequently, last July she completed a modification on the loan. Since then she has been able to make timely payments and remains current on the mortgage. 

I have been told that I need to wait a full 2yrs before applying for a loan. Is this a general rule of thumb or something that lenders have no flexibility in?

A simple review of our finances would clearly reveal that our earnings and savings will more than service the new mortgage and previous debts. Are you aware of any lenders that may be more understanding of a situation such as ours? 

Thank you the feedback! Your insight is greatly appreciated!


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Loans that are securitized by Fannie or Freddie don’t have any leeway regarding the time lapsed after a modification, but you certainly have a strong credit profile otherwise, and would be a great candidate for a portfolio loan from a local bank. Portfolio loans are held by the originating bank (rather than securitized), and are typically intended as a bridge to get borrowers to the point where they can get a conforming loan that can be sold to Fannie or Freddie. They may be a balloon loan due in several years, or an adjustable, won’t be a 30 year fixed because local banks don’t want to assume the interest rate risk involved with holding a 30 year fixed loan on their books. I would start with where you bank, ask them if they do portfolio loans, and if not, start calling local banks. Since everything about your credit profile appears strong (other than Mom’s loan!), you ought to be able to find someone willing to work with you. Good luck!

Answered about 1 year ago
Ted Rood
1269 6

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