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Can You Buy a Home If You Have a Loan Modification?

By Homesmsp @HomesMSP

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!

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