Can you buy a home if you have a loan modification?

There are many people that contacted their lender to see if they could lower their payment on their current mortgage.  Some of those refinanced their existing loans, others did a loan modification.  A loan modification may affect your ability to get a new home loan.

Lenders will look at your credit report and see how your current lender is reporting your mortgage.  If it shows a modification or paying under partial agreement, the underwriters will go over your mortgage history.  If you show a history of late payments or other issues, they may consider the loan modification a "pre-foreclosure".   This may mean you need to wait longer before you can buy a new home.  It is similar to a short sale as you are not paying your mortgage as the original note stated. 

You may need to wait up to 3 years after a loan modification – in some cases it may be as little as a one year wait.  You will need to show the underwriter the documentation on the modification.

If you have a modification, talk to a loan officer and see what you need to do for a mortgage approval.  That way, when you are ready to buy, there won't be an issue!  If you are thinking about a modification, talk to a loan officer and see if there is any way you can refinance instead of doing a modification!

Leslie Vanderwerf,  NMLS ID#335509, American Mortgage & Equity Consultants – EmailWebsite

 

Written By

Currently a Senior Loan Officer at Cross Country Mortgage LLC, it's hard to believe I have been in the mortgage business for more than 25 years and have worked with Sharlene since 2000! I love sharing mortgage insights here each week and helping people finance their homes. Listening helps me find the right program for you!

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