Refinancing Guidelines With Recent Late Payments

This article covers late payment refinancing guidelines in the past twelve months. Mortgage rates have been skyrocketing since the beginning of 2022. Rates have skyrocketed to the highest level in the past 36 months. Lenders normally require timely payments in the past twelve months:

The Federal Reserve Board has announced they will keep increasing interest rates. An interest rate increase by the Feds means higher mortgage rates.

Mortgage rates have been highest since the 2008 Great Recession, and Real Estate Collapse since late 2021. Most homeowners who closed their home loans in 2018 have low rates in the 3.0% range. Homeowners need to meet general Refinancing Guidelines. Refinancing Guidelines are different depending on the loan program.

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Refinancing Guidelines on Net Tangible Benefits

Most homeowners refinance their current mortgages to lower their monthly housing payments. This is done by refinancing their current mortgage with a new home loan at a lower mortgage rate. Refinancing their mortgage to a lower-rate loan can save homeowners tens of thousands of dollars throughout a 30-year fixed-rate mortgage. However, there are other reasons why homeowners need to refinance.

Reasons To Refinance

Here are other reasons homeowners need to refinance their loans besides lowering their mortgage rates. To take out non-occupant co-borrowers. Due to divorce, they must take the ex-spouse off the mortgage note. Homeowners with equity in their homes may need to do a cash-out refinance. Take over the property if a parent dies to pay off a Reverse Mortgage. A Land Contract is coming due and needs a traditional government or conventional loan. They are refinancing from a Non-QM to a traditional loan and refinancing an adjustable-rate mortgage to a fixed-rate mortgage.

VA And FHA Refinancing Guidelines With Bad Credit

VA and HUD Refinancing Guidelines allow streamlined refinance mortgages. VA and FHA loans have a streamlined refinance mortgage program without requiring appraisal or income docs. Borrowers with an FHA or VA loan can do an FHA and VA Streamline Refinance with limited documentation. The only requirement is they have been timely on their current loan for the past 12 months.

Borrowers can have late payments on any other credit tradelines except for their mortgage. One 30-day late payment in the past 12 months is allowed. Streamlines often close in two to three weeks.

Per VA and HUD refinancing guidelines, there is no appraisal is required. No income documents are required. Credit Scores are used to price out mortgage rates. The higher the borrower’s credit scores, the lower the mortgage rates. There is no cost to streamlining. Borrowers often get to skip one or two monthly mortgage payments after they streamline.

Mortgage Late Payment Refinancing Guidelines In The Past 12 Months

Lenders allow prior bad credit when qualifying borrowers for a mortgage. Borrowers can have late payments, collections, charged-off accounts, prior bankruptcy, or housing events. However, borrowers do need timely payments in the past 12 months to get an approve/eligible per the automated underwriting system (AUS).

One or two late payments in the past 12 months are not always a deal-killer. Multiple late payments in the past 12 months are often a deal-killer

Lenders understand borrowers may have extenuating circumstances in the past. The key question is having timely payments in the past 12 months. However, lenders need to see that borrowers have re-established themselves and have been timely in the past 12 months.

Qualifying For Mortgage With Late Payments In The Past 12 Months

Borrowers who had late payments in the past 12 months can qualify for a mortgage with Non-QM loans. There is no waiting period after bankruptcy, foreclosure, deed-in-lieu of foreclosure, or short-sale with Non-QM loans. There is no private mortgage insurance required with non-QM loans. There is no maximum loan limit. A 10% to 20% down payment is required.

Non-QM mortgage rates are higher than government and conventional loans. However, non-QM mortgage loans have lenient lending requirements versus traditional loans. Non-QM loans can be used as a bridge loan for borrowers with late payments in the past 12 months.

Once borrowers have been timely and get their credit re-established, borrowers can refinance the Non-QM Loans to a traditional mortgage with lower rates and terms. For more information about the content of this article or other mortgage-related topics, please contact us at Gustan Cho Associates at 800-900-8569 or text us for a faster response. Or email us at gcho@gustancho.com.