If you've had a foreclosure or a deed-in-lieu of foreclosure, let your lender know early in the process. This helps them determine which loan options may still be available to you. A deed-in-lieu is when you voluntarily transfer ownership of your home to the lender to avoid foreclosure.
Short Sale
A short sale occurs when a homeowner sells their property for less than the amount owed on the mortgage. Because the lender doesn't recover the full loan balance, short sales are seen as a negative mark on a borrower's record and can affect future loan approval.
Vehicle Repossession
Lenders take vehicle repossessions seriously. Like a short sale or a foreclosure on a home, the borrower has been unable to meet their financial obligation in repaying the lender who is holding the loan on the vehicle.
Payment Shock
Payment shock refers to the increase in monthly housing expenses a borrower will face when taking on a new mortgage. Lenders use this calculation to assess whether the increase from your current housing payment to the proposed mortgage is manageable. To determine this, underwriters divide the new housing payment by your current rent or mortgage. If the result shows your new payment is more than double (200%) your current one, that may raise a red flag. While high payment shock doesn’t automatically disqualify you, it does require stronger compensating factors—such as significant cash reserves—to show you can handle the increase.
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