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Should I wait until my 4 year waiting period is up or use FHA financing now to buy?
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What if I included my mortgage in bankruptcy, lived in it for a short period, and then short sold the home?įannie Mae’s doesn’t specifically clarify this scenario but they told us your 4 year waiting period would begin from the date of the BK discharge, not the date of the short sale. This transfer of title ownership is technically referred to as the foreclosure process. What if my lender did not transfer title or ownership after discharging my mortgage debt soon after the bankruptcy?įannie Mae Conventional financing will now go by the date your mortgage debt was discharged…not by the date the bank processed the transfer of title or property ownership. That too will likely save a borrower $150-$350/month in lower PMI premium payments depending on the borrowers credit score and down payment amount. On a $300,000 purchase, the lower mortgage insurance premium (or lack there of) will save you $5,066!Ĭonventional financing also has much lower private monthly mortgage insurance premiums (PMI) than FHA. The biggest benefit will be in the amount of money saved by having lower monthly payments when no longer having to use costly FHA financing to buy again after including the mortgage debt in bankruptcy.įHA financing charges borrowers a 1.75% up front mortgage insurance premium (UFMIP) in addition to a ridiculous 1.35% mortgage insurance premium each month!Ĭonventional financing does not charge an up front mortgage insurance premium like FHA.
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Foreclosure after Mortgage included in BK = 7 Years now just 4 years!īorrowers who included their mortgage debt in bankruptcy or did a deed-in-lieu of foreclosure (DIL) no longer have to wait 7 years to qualify and buy again when using Conventional financing.Read about updated guidelines to buy after foreclosure here. Previously, homeowners who included a mortgage in bankruptcy were forced to comply with the foreclosure and/or deed-in-lieu of foreclosure waiting period of 7 years. Fannie Mae reduced the waiting period for borrowers who foreclosed after discharging the mortgage debt through bankruptcy to just 4 years! Details can be read in Fannie Mae’s Selling Guide SEL-2014-10.