An old client contacted me yesterday worried that she would not be able to get a mortgage to buy a home. Her loan had gone into default a couple of years ago and a Notice of Default – the first step in the mortgage process – had been filed. To your credit report, this is the same thing as being foreclosed on.
She and her husband were thinking of buying up, but her real estate agent told her that no lender would work with her – the NOD had to be at least four years old. This was true for a while, but isn’t anymore, so if that’s what’s stopping you, there is some information you need.
FHA (The Federal Housing Administration), which is part of HUD (Housing and Urban Development), created a new program last year called the Back to Work Program. This program allows borrowers to get a new mortgage only 12 months after the closure of a negative event. There are conditions, of course. From HUD’s web site:
“FHA will allow consideration of borrowers who have experienced an Economic Event and can document that certain negative credit ratings resulted from loss of employment or significant loss of Household Income beyond the borrower’s control; and the borrower has demonstrated full recovery from the event and completed housing counseling.”
This program is in force from August 15, 2013 through September 30, 2016 only. So the clock is ticking.
Frankly, I work with a lot of families and an awful lot of them meet this description. It still may not be the right time for you to move up for other reasons, but if a negative credit event due to circumstances beyond your control is what is holding you back, it may be time to rethink your position.
If you are thinking of buying your first home, now is an awfully good time, as home prices are rising. You might have sticker shock when you look at homes, but your new home will never cost you less that it will today.
If you are thinking of moving up to a larger home or a better school district, now is the best time in years to sell your current home. The key to finding your next home is to have a great real estate agent – one who will diligently search for your new home and aggressively negotiate to be sure you are the buyers who are chosen. If you don’t know one, I do and can give you a good referral.
If you’d like to know what you can net from your current home and what your new home will cost, I am an Excel geek so I have an app for that, and would be happy to help.
The main point of this blog is: if the time is right for you to buy a home or move up, don’t let your old credit issues keep you from getting what you want. We can work with them.
My name is Casey Fleming and I originate mortgage loans throughout California. I am based in Silicon Valley.
(408) 348-3442 / email@example.com / http://www.loanguide.com
NMLS 344375 / BRE 00889527