Happy Thursday Everyone, 
I saw a post here in the Mortgage Loans forum from someone
asking about the waiting period for folks with a discharged BK
who want to apply for a USDA Guaranteed Loan.
I called my mortgage broker this afternoon. She's been in the
business over 20 years and makes a point to stay on top of
any changes in requirements for government-backed loans
like FHA, VA and USDA.
Here's what she told me re USDA Guaranteed Loans if you
have a previously discharged bankruptcy ( Ch 7 or Ch 13 ).
*** The most important piece of the puzzle is your middle
FICO score. It's always important when applying for a mortgage,
but in this case it is critically important.
*** It is imperative that you begin rebuilding your credit immediately
after filing for BK ( 7 or 13 ). The higher your middle score, the more
doors will be opened to you.
Now for the nuts and bolts:
---- Middle FICO Scores of 620 or Higher -----
*** If your middle FICO score is 620 or higher ( 620 to 850 ),
there is absolutely NO waiting period if you have a discharged BK.
Chapter 7 or Chapter 13, it doesn't matter.
----- Middle FICO Scores of 619 or Lower -----
*** If your middle FICO score is 619 or lower and your BK 13 has
been discharged, there is NO waiting period. If you were discharged
today, you can go out and apply for a USDA Guaranteed Loan
tomorrow.
HOWEVER, if you have a discharged BK 7, it is the underwriter's
discretion as to whether or not you can apply and/or be approved.
One lender may not care and let you apply with no problem; another
may tell you that you have to wait up to 3 years before applying.
It's a hit or miss proposition. So do your homework and shop around
if you want a USDA Guaranteed Loan, your BK 7 is discharged and
your current middle FICO is 619 or lower.
There are some other hurdles you have to negotiate if your mid FICO
is 619 or lower with a discharged BK 7:
-- Underwriters want to see 3 to 4 tradelines paying as agreed.
-- Alternate credit like cable bills, phone bills, utility bills, rent, etc.
WILL be accepted as part or all of the 3 to 4 tradeline requirement
-- Your new USDA Guaranteed Loan mortgage payment cannot
exceed 100% of your current home payment (rent or mortgage)
Example: If your rent is $500/month and the USDA mortgage pymt
will be $1,200/month, the loan won't be approved. If the new pymt
is $1,000/month or less, you may be approved, provided all other
loan requirements are met successfully.
Now you know what I mean when I said that your middle FICO is
vitally important. The higher your score, the easier the loan process
for USDA Guaranteed Loans.
So, to review:
*** If your current middle FICO is 620 to 850 and you have a discharged
BK 7 or BK 13 in your past, there is no waiting period. You can apply right away.
*** If your middle FICO is 619 or less and you have a discharged BK 13,
you can apply right away. There is no waiting period.
*** If your middle FICO is 619 or less and you have a discharged BK 7,
there are strings attached and hurdles you must negotiate in order to be
approved. But it can be done....with a greater degree of difficulty.
My advice is to go after the extra point and get your middle FICO to 620.
Then you won't have to worry about it...
I hope this helps. If this information applies to you or someone you know,
please read thru it a few times to let it soak in. Then, check with your USDA
lender of choice so you can get the ball rolling.
Good luck to all of you!!!
CanDo
"The right attitude is everything"
You're welcome, granny. I'm happy to help!!!!
CanDo
"The right attitude is everything"