I have learned a lot in my 10 years as a loan officer and Realtor. I would say that the most important thing to know about real estate is that nothing stays the same; the rules are in a constant state of change. When the housing market crashed, lenders tightened the rules to make it more difficult to borrow money. Now that the housing market is gaining strength, lending rules are relaxing. One of the latest changes is a new FHA rule that allows buyers that had a short sale, bankruptcy, or foreclosure purchase a new home after waiting only 1 year. Known as the “Back to work – Extenuating Circumstances” program, this program is designed to help out those that may have lost a home due to an economic event. There are, of course, restrictions to this new rule. Some of the key points are:
• The home owner needs to have experienced an “economic event” beyond his/her control that resulted in a loss of income of 20% or more and that lasted at least 6 months.
• No late payments on any credit account or rent payments for the past 12 months.
• You must attend an approved HUD counseling program.
The great thing about FHA is that it only requires a 3.5% down payment and the loan comes in a low interest rate traditional 30-year fixed rate and payment.
In addition to the FHA Back to Work Program, there are several other FHA and Conventional loan programs that allow someone that experienced difficulty in the past to purchase within 1 – 3 years. To find out if you qualify, please give me a call or send me an email.
If you are interested in reading the entire FHA Bulletin, here is the link to Mortgagee Letter 2013-26