Things That Can Delay Your FHA Home Loan
Financial / Credit Issues That Require a “Seasoning Period” Before a New FHA Mortgage
Borrowers who apply for FHA home loans too soon after a bankruptcy, foreclosure, deed-in-lieu, or similar financial issues will learn that mandatory “seasoning periods” or waiting times may be required before they are permitted to apply for a new FHA mortgage.
Any borrower delinquent on an FHA loan, or still in a bankruptcy proceeding that has not been discharged yet, will be require to wait a minimum amount of time (anywhere from one to three years or more depending on a variety of factors) before being allowed to apply for a new mortgage.
The seasoning period for a delinquent FHA mortgage does not apply in cases where a refinance or loan modification is made to help the borrower avoid foreclosure on a home currently secured by an FHA mortgage. But it’s crucial to know that skipped payments are not allowed. A lender may be willing to forgive or write off a certain amount on the mortgage, but one way or another the FHA loan will be brought current as a condition of such transaction.
Appraisal Issues That Require Corrections or Repairs
FHA home loans for new purchases require an appraisal. That appraisal may result in one or more corrections or repairs required as a condition of loan approval. In many cases these corrections are assigned with a caveat that they must be completed as a condition of loan approval.
If those corrections require more time than you have before a projected or estimated closing date, you may find that the closing date must be changed to accommodate the required fixes.
Changes in Your Credit Between FHA Loan Application Time and Your Closing Date
When you fill out your FHA loan application, your lender must pull your credit reports. But that’s not the only time your credit is subject to review during the home loan process. You aren’t “safe” from another credit check until the loan has closed and you are the official new owner of the property.
If your credit situation changes between application and closing time, your lender may have to re-verify your ability to afford the loan. Applying for any new credit during your home loan process can not only delay the transaction (best case), it could result in your loan being cancelled (worst case). Don’t apply for new credit while trying to get approved to purchase your home.
Some home loan transactions have unfortunate timing-the buyer finds a home, applies for the loan, and may even be approved and have a closing date scheduled when a natural disaster strikes. Such occurrences may sound rare, but a review of the storm seasons of 2017 and 2018 are proof that thousands of people can be affected by these disasters.
In cases where a borrower was about to close or was at some stage of the mortgage loan process beyond the initial application, it’s strongly recommended to check in with the lender as soon as possible after the initial damage assessments have been made to see what options are available.
In cases where a home has been damaged, it will be up to the borrower and lender to work out what happens next. In cases where the home is seemingly intact, steps may be required to insure the property wasn’t damaged in some hidden or previously undetected way. HUD 4000.1 addresses this directly, saying that in some cases a new inspection is required.
“All Properties with pending Mortgages or endorsements in Presidentially-Declared Major Disaster Areas (PDMDA) must have a damage inspection report that identifies and quantifies any dwelling damage. The damage inspection report must be completed by an FHA Roster Appraiser even if the inspection shows no damage to the Property, and the report must be dated after the Incident Period (as defined by FEMA).”
Ask your loan officer if you have questions about these policies. Lender standards, state law, and other requirements may also apply.
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