Over the past several years, many homeowners were negatively affected by the economic downturn. Jobs were lost and incomes were reduced. This forced many homeowners to lose their homes to foreclosure, forced homeowners to sell their homes as a short sale or turn their properties over to the banks via a Deed in Lieu of foreclosure. The recession caused many people to experience serious credit difficulties and file for bankruptcy. Many of these situations were caused by circumstances beyond the homeowner’s control.
In an effort to bring homeownership back to those that lost their homes during this crises, FHA announced a new program in August that may give borrowers the chance at homeownership again sooner than the ‘standard’ waiting period of three to seven years.
FHA recognizes the hardships homeowners faced and understands that the current credit histories of many of these borrowers do not necessarily paint the true picture of the borrower’s ability or willingness to repay a mortgage and take responsibility for their financial obligations. As a result, FHA has set up new loan guidelines for borrowers impacted by the economic recession.
FHA is now considering these extreme economic circumstances when reviewing a borrower for a new mortgage loan and has set new guidelines and restrictions in place for reviewing mortgage loan applications for those impacted. To be considered, you must be able to document the following:
- Show the borrower’s credit decline and impairments were the direct result of the economic recession by causing either a job loss or a significant loss of household income that was beyond the borrower’s control;
- Show that the borrower has demonstrated full recovery from the event;
- The borrower has completed housing counseling; and
- The borrower meets all other HUD guideline requirements
You must be able to document that your job loss or loss of income resulted in an income reduction of more than twenty percent of your gross wages and lasted for a period of six months or more. Additionally, you must be able to demonstrate a satisfactory credit history before the economic hardship and that satisfactory credit has been re-established for at least twelve months since the economic hardship. Satisfactory credit is determined by the lender and must show the borrower’s credit history has been free of any late mortgage or housing payments and installment debt payments for a minimum of twelve months, and all major derogatory credit issues on revolving accounts, collection and judgment accounts have been cleared.
Whether you are a first time homebuyer or a previous homeowner and you were negatively affected by the downturn of the economy, the opportunity for homeownership may be available to you sooner than you think. If your credit was negatively affected but you are not sure what your credit looks like today or how to begin repairing your credit, there is help available to you.
If you are ready to buy, Pink Realty has experienced and professional real estate agents who can help you find your perfect home. If you are not quite ready to buy, they have a great rent-to-own/lease purchase program that can put you into a home today and buy it in a year. They can put you in touch with a reputable lender who will help you get your credit back on track!
Homeownership can be yours again so don’t wait! Call the experts! Call Pink.