Mortgage Approval With Late Payments In The Past 12 Months

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This blog will cover and discuss getting mortgage approval with late payments in the past 12 months. Getting A Mortgage Approval With Late Payments in the past 12 months is possible as long as the borrower can get approve/eligible per an automated underwriting system (AUS).

You can have prior bad credit, unpaid collections and charge-off accounts, repossessions, late payments, and low credit scores. However, you need timely payments in the past 12 months to get an approve/eligible per automated underwriting system (AUS). You do not have to pay outstanding collections and charge-off accounts to qualify for a mortgage.

Lenders and the automated underwriting system have frowned upon late payments in the past 12 months. Borrowers can have prior bad credit with outstanding collections and charged-off accounts and still qualify for a mortgage as long as they have timely payments in the past 12 months.

Denied For Mortgage Approval With Late Payments on Manual Underwriting

The right-hand rule to get approve/eligible per the automated underwriting system with bad credit is to have timely payments in the past 12 months. You need timely payments in the past 24 months to qualify for a manual underwrite. FHA and VA manual underwriting guidelines are exactly the same. FHA and VA loans generally need two years of timely payments for manual underwrite. However, you can get away with just one year of timely payments with VA loans.

Timely payments in the past 12 months are one of the most important factors in getting qualified for a mortgage. Late payments after the bankruptcy discharge date and a housing event are frowned upon by lenders.

It is fine to get prior outstanding collections and bad credit. However, the key to getting mortgage approval is to have timely payments in the past 12 months. Mortgage approval with late payments in the past 12 months is not always a deal killer. You could get mortgage approval with late payments in the past 12 months if it were only a one or two-time late payment.

Negative Factors Viewed By Mortgage Underwriters When Underwriting Borrowers

Mortgage underwriters frown upon the following:

• Late payments
• Open collections
• Charge offs
• Bank overdrafts
• Judgments
• Tax liens
• Maxed out credit card balances

Mortgage Approval With Late Payments In The Past 12 Months Depends On AUS Findings

Borrowers can get a mortgage loan approval with the following derogatory items:

• Prior bankruptcies
• Foreclosures
• Deed-In-Lieu Of Foreclosure
• Outstanding collections
• Outstanding Charge-Offs
• Bank overdrafts
• Judgments
• Tax liens
• Late payments

What Mortgage Underwriters Look For In The Past 12 Months

However, mortgage underwriters do not want to see overdrafts and late payments in the past 12 months. Mortgage Approval With Late Payments in the past 12 months is almost impossible.

You can get mortgage approval with late payments that have been seasoned for at least 12 months. Unfortunately, late payments happen either by mistake or for other reasons.

Some lenders will not approve a mortgage loan application if borrowers have had recent late payments in the past 12 months. Fortunately, I can help those mortgage loan applicants who have had one or two late payments in the past 12 months.

Some Quick Fixes For Mortgage Approval With Late Payments

If you have one or two recent late payments with a creditor, see if you can contact the creditor and ask them sincerely if they can give you a one-time reprieve in removing that late payment from your credit report. Borrowers who have had a timely payment history with the particular creditor who has reported consumers 30 days late ask them if they can give a one-time chance.

Consumers will be surprised at how many creditors will remove the late payment history of a credit report. The chances for borrowers with a history of making late payments will probably not be good.

The creditor can delete the late payment history for borrowers with a history of timely payments. If the customer service representative says no, ask to speak with a supervisor. If the creditor agrees and removes the late payment history from the credit report, the late payment deletion will also greatly boost credit scores.

Is It Possible To Get Mortgage Approval With Recent Late Payments?

The good rule of thumb is to wait for a minimum of 6 months of timely payments if their consumers had a recent late payment on a credit report. However, for those who are current on the late payments and have a good letter of explanation as to why they were late, it is possible to still get a mortgage approval without the six months timely waiting period. 

Gustan Cho Associates, a dba of Gustan Cho Associates, is a national mortgage company licensed in multiple states with no overlays on government and conventional loans. The team at Gustan Cho Associates has a reputation of being able to approve and close mortgage loans other mortgage companies cannot do. Over 80% of our  borrowers are folks who could not qualify at other  mortgage companies due to lender overlays or because the lender did not have the mortgage loan options best suited for the borrower. We can help borrowers get  mortgage approval with late payments in the past 12 months. 

We are licensed in multiple states and go off Automated Underwriting System Findings. Borrowers who have recent late payments on a credit report and need to qualify for a mortgage loan, don’t hesitate to contact us at 800-900-8569 or text us for a faster response. Or email us at gcho@gustancho.com. The team at Gustan Cho Associates are mortgage brokers licensed in 48 states including Puerto Rico, the U.S. Virgin Islands, and Washington, DC.