Most people do not understand what it takes to qualify for a mortgage. It’s no wonder! Changes in the mortgage market have even seasoned professionals confused by what it takes to qualify. If you are looking at buying a home in the next year, here are three things that can prevent you from qualifying for even a bad credit mortgage.
Foreclosure in the last 36 months
At one time, there were lenders who would give you a mortgage just one year after a foreclosure. Needless to say, times have changed! If you have had a foreclosure, you will need to wait three years before you buy a new home. Unfortunately, there are no exceptions to this! One option is to look at getting into a rent to own home with a 36 month rental term. That way, you are working in the direction of your dreams and are building equity in a home that you will eventually buy.
Federal or State Tax Liens
Most derogatory credit can only stay on your credit file for seven years. Bankruptcies and judgments are the exception to this as they say on your credit file for ten years.
Unfortunately, for those with federal or state tax liens, there is no limit to how long they will stay on your credit file. There is also no statute of limitations on tax liens. This means that they can be collected now, or 20 years from now. Regardless, you will not qualify for a mortgage until your tax liens are paid in full.
Judgments
Any judgment against you will show up in the title search for your property. Because judgments can attach to a new property purchase, lenders will not approve a mortgage for someone who has a judgment. So, like tax liens, judgments will need to be paid in full prior to buying a home.