Another Great Road to Recovery Mortgage Program

Texas Highway

Back in August of 2013 we wrote Buying Today Despite Short Sale Yesterday, which addressed the fact that those who were victims of a recent short sale (less than two years ago) could possibly obtain a mortgage for purchase or refinance, provided certain elements existed.  The elements for success included: 1. No other credit issues, 2. Solid equity/down payment of 30% or more, 3. Solid reserve funds and 4. solid income.  That program has been extremely effective, especially for non-conforming loans; in fact, an existing client is pre-approved for a $2.5mm purchase and the foreclosure occurred only two years ago!

Now, Housing and Urban Development (HUD) has stepped up their game with a similar program, the Federal Housing Administration (FHA) Back to Work Program.  In short, if a borrower lost their home over 12 months ago due to financial hardship and she/he have re-established credit (or maintained otherwise good credit), then they may qualify to get a new mortgage to purchase a home without the standard two to seven year waiting periods required under conventional mortgage programs.  A financial hardship is defined as a loss in income of 20% or more for at least a 6-month period and it must be documented.  The borrower must also document that she/he has fully recovered from the hardship.  Finally, the borrower(s) must attend a credit counseling class prior to submitting an application.  All other FHA requirements apply as well, but the rates are extremely competitive and help to stretch the qualifications of applicable borrowers.

For complete information on this program or any other mortgage program, contact your trusted mortgage advisor at Absolute Mortgage Banking.

Buying Today Despite Short Sale Yesterday

For those would-be homeowners who want to purchase a new home today, but had a recent short sale in their history, there is hope.

The typical waiting period on a short sale is at least two years, i.e., a borrower must wait at least two years from the recording of the short sale to become eligible for conventional financing. However, if the circumstances around the short sale were extenuating in nature, it is actually possible to buy TODAY and finance up to 70% of the purchase. Beyond the 30+% down payment, the borrower needs to have an otherwise perfect credit history, strong reserves and a low debt-to-income ratio.

And what about other waiting periods associated with other past credit blemishes like foreclosure or bankruptcy? Check out the following grid for more detail on the typical waiting periods..:

Short Sale 2

For more details on the above or other tidbits that may help you better prepare you or your clients for a property purchase or sale, please contact your favorite mortgage advisor.