Buying A Home Just One Year After Bankruptcy Foreclosure Or Short Sale

Dated: 09/12/2013

Views: 656

Were you forced into a bankruptcy, short sale, deed in lieu of foreclosure and/or a foreclosure over the past few years? Was your financial difficulty a result in at least a 20% reduction in income? If so, you may have the option to become homeowners once again within just 1 year!

Current timeframes for buying a home after financial default.
  • 2 yrs for chapter 7 bk
  • 3 years for most short sales
  • 3 years for foreclosures 
FHA has released a new program that allows eligible borrowers to buy 1 year after a bankruptcy, short sale, deed in lieu of foreclosure or foreclosure.  FHA is calling this new make sense mortgage program the “Back to Work” program. This new FHA based program was established by FHA to help people that realized a reduction in income as a result of the recession. 
Below are a few key “Back to Work” FHA mortgage guidelines:

Basic program guidelines:

1. Borrower(s) must have sustained a reduction in income of at least 20%
2. Borrower’s reduction in income must have lasted for at least 6 months
3. Borrower’s income reduction must be related to an “economic event” (in other words employment circumstances beyond their control - layoff, termination, reduction in hours/overtime, pay cut etc…) 
4. Borrower’s bankruptcy, short sale, deed in lieu of foreclosure or foreclosure must have been directly related to the reduction in income and economic event 
5. Borrower must have re-established credit within the 12 months after the bankruptcy discharge date, short sale completion date and/or foreclosure recording date

 Clients that are utilizing this program will also be required to complete specific home buyer education (details to follow soon)

Lenders may set forth different guidelines (different than traditional FHA guidelines) relative to this program.  For example, a client may need a higher credit score and/or lower debt to income ratio when compared to traditional FHA guidelines.

Contact me today to get in touch with a local lender here in Arizona that can help with you this new program.
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Chad Hagenson

Coming from a long family history in the real estate profession, I virtually grew up in the industry. I moved from Northeast Iowa to Mesa, Arizona in 1984. I began working for a busy real estate offi....

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