The Road back to Homeownership

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Every day I speak to people who have experienced the pain and stress of losing their home. They all have one thing in common; the ‘hope’ of owning their own home again and they want to get there as quickly as possible.
There is a lot of mythology circulating in the street. So, today, I thought it would be helpful to hit the high points of the rules and options as they exist today.
Many who are successful in completing a ‘Short Sale’ are under the impression that they can go right out and buy another home. There are very limited circumstances where this would be the case. In most cases, from the standpoint of any federally regulated mortgage, a short sale is treated similarly to a foreclosure from an underwriting perspective.
Here are some tips that will provide the shortest route back to ownership.
Waiting Periods:
• FHA is the shortest route and allows a new loan 3 years after the date the lender makes the claim against the FHA insurance fund. It doesn’t matter whether it is a short sale or a foreclosure. However, the minimum required down payment is only 3.5% once the time has passed.
• On a conventional loan, down payment makes a difference. If the borrower has 20% to put down after a short sale, the time frame can be as little as 2 years but increases up to 7 years if the borrower has had a foreclosure and now only has the minimum investment of 5% down.
Save the paperwork!
I know most people just want to forget and would love to burn the paperwork involved. Don’t do it! Get a box and SAVE it all. The circumstances surrounding the situation will need to be documented. With all of the stuff related to robo signing and delays in processing the paperwork some of these procedures and their recording dates are getting really dragged out. If you can’t prove what happened, it may add months or years on to qualifying for the new loan.
Take Charge of Improving Your Credit Score:
Go on-line to www.annualcreditreport.com to get a free copy of your credit report from all 3 bureaus. This is the only site officially recognized by the Federal Trade Commission. All accounts in your credit report must be current and reporting accurately. If not, work on correcting them. If you’re not sure how, contact us and we’ll be happy to give you some guidance.
• Re-establish Credit: when a borrower’s previous credit history includes a bankruptcy or foreclosure-related action, the re-established credit must include active credit with no new late payments or past dues since the discharge or completion of the bankruptcy or the completion of the foreclosure-related action. No new public records for bankruptcies, foreclosures, deeds-in-lieu, pre-foreclosure sales, unpaid judgments or collections, garnishments, liens, etc.
• Contact me 6 Months in advance of when you think you will be ready to buy your home so we can pull your credit report to review it. This will give us time to fix any errors still reporting incorrectly on your credit report and make sure all the necessary pieces are in place so we can get you back in a home sooner rather than later. Got questions? Don’t hesitate to call. We’re all about helping to heal the real estate industry. -Kate Wilson

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