Buy a home one year after bankruptcy, foreclosure or short sale!
The FHA Back to Work Program at 1st Alliance Lending
Over the last few years, the collapse of the housing market, the market crash, and crushing health care costs left many Americans buried. Faced with mounting debt, falling home values, and job loss, many lost their homes or were forced into bankruptcy. Many are now on the road to recovery from these traumatic life events, but now face the prospect of having to wait as long as seven years to again become homeowners.
There is now a program for those who lost a home, a job, or both during the Great Recession, but are ready to buy a home again. The Federal Housing Administration’s Back to Work program is helping many recapture the dream of owning their own home without years of waiting.
HOW IT WORKS
Instead of the usual multi-year wait to get a mortgage, qualifying borrowers are now able to apply for a mortgage just 12 months after bankruptcy, foreclosure, short sale or a deed in lieu.
In addition to meeting the usual requirements for an FHA loan, the Back to Work program added elements to the loan process:
- Housing counseling – You will need to take a HUD approved housing counseling class to learn strategies for successful home ownership in the future. There will be a 30 day waiting period between the counseling and an actual application. (click link: http://www.hud.gov/offices/hsg/sfh/hcc/hcs.cfm)
- Documentation of hardship – Borrowers will need to prove that the financial hardship they experienced was beyond their control, and will usually need to show an income reduction of 20% or more that directly led to the bankruptcy or home loss. Extreme increases in expenses, such as medical bills, can be sufficient, even if no income loss is directly reported. A good credit history before the hardship is also a good indicator of future success.
• Proof of recovery – Underwriters will want to make sure that the financial hardship is over. This can be shown with a clean 12 month credit history, establishment of new credit, ability to save money, and full time employment.
HOW 1st Alliance Lending CAN HELP
There are many reasons why 1st Alliance Lending is the best lender to help you buy a home using the Back to Work Program:
- Proven success with the Back to Work Program – We closed one of the first Back to Work loans in the country, just 3 months after the program was introduced. Since then, we have seen hundreds of these loans. While other lenders may have only seen a few of these cases and don’t really understand the process, we know these loans inside and out – and we know how to close them!
- Experience with distressed borrowers – We have led the nation in helping borrowers avoid foreclosure after financial hardships. We championed the Hope for Homeowners program, FHA short refinances, and even a second chance program for people who were years behind on mortgage payments. We are extremely familiar with documenting hardships, credit analysis, and determining future success.
- Individual, personalized attention – We don’t use computers to determine your hardship. At 1st Alliance Lending, we will manually underwrite your entire file. This means that real people will review your situation, read your letters and listen to your story. Our company has operated this way at every level, and always has. You will have a personal guide to help you though the entire process from start to finish. At 1st Alliance Lending, we understand that people are far more than just their credit scores.
If it sounds like the Back to Work for program may be for you, click here to reach out: http://www.1stalliancelending.com/lets-connect/
Congratulations! You’re ready to buy your first home. It is an exciting time, but also one of great learning. Many buyers discover that they may not be familiar with the home buying process. If you have just submitted your loan application, here are some tips to keep the process running smoothly:
Don’t apply for another loan, such as a car loan. You don’t want to have any changes to your credit status while your application is being processed. You should refrain from co-signing a loan for someone else or start a new loan process for yourself. These would both affect your credit score and possibly decrease the amount of money you are able to qualify for on your mortgage.
Make all other payments on time. Keep up with your credit card payments so your credit rating remains good. In addition, you will want to limit how much money you are charging to your credit cards or removing from your bank account. This will change your utilization ratio and may affect your loan application. Wait until after your loan has been processed to make large purchases such as furniture and appliances for your new house.
Make a calendar of when all of your monthly payments are due. This will help you plan your finances and keep an eye on when each payment is to be received by your creditors.
Hold off on large deposits. You may think it would be helpful to deposit a large sum of money in your bank account but it may actually result in a delay to your application being processed. Abnormal deposits will require that the source of the money be verified which can take time.
Wait to change jobs. If you have been considering a job change now is not the time to do it. A change in your job status means your loan application will need to start over again.
At 1st Alliance Lending we are happy to help first time buyers through the process. We realize that first time buyers are not familiar with the Do’s and the Don’ts of buying a home. Please contact us at any time with questions, so you can provide you the information you need for a successful first time buying experience.
People love to give advice based on their personal experience. It can be hard to tell which advice is valuable and which should just be ignored. Often, the advice is inaccurate or simply a myth. Here are some myths you may have heard while buying your first home and the realities of the process.
Myth : You can start looking in May and be moved in by August.
Reality : Although you may be aiming to move before the school year starts you shouldn’t set an unattainable timeline. According to the National Associations of Realtors the average home search takes 12 weeks. At this point your offer may be accepted but the processing of the mortgage paperwork is also a significant time period, often 90 to 120 days. So you may be looking at an 8-month time frame but keep in mind that each individual situation varies. Some people will find their dream home relatively quickly and others will be looking for over a year. You don’t want to be rushed so try to go month to month on your lease to allow yourself the time you need to find and purchase a home you desire. Do your research relative to your market.
Myth : Don’t bother looking if your credit score isn’t strong.
Reality : Many people will tell you that a bad credit score means you won’t be able to buy a home. Don’t give up hope. At 1st Alliance Lending we believe you are more than a three-digit number. We want to understand your story and why your credit score is what it is. We understand that some people face unfortunate circumstances that are out of their control. We look at the whole picture and let you know if we think you are ready for a mortgage. If not, we will let you know what steps you should take to get ready.
Myth : Always choose the lowest interest rate option.
Reality : When you are buying a home you will likely be presented with a few mortgage options. The interest rate will vary with the different options, depending on the length of the loan (15, 20 or 30 years) and the type of loan (adjustable rate mortgage vs. fixed). Obviously you need to select a mortgage payment you can afford. The shorter the loan, the higher the monthly payment will be. The interest rate will be lower but if you aren’t comfortable you can afford the monthly payment then go with the slightly higher interest rate. An adjustable rate mortgage may appear better than a fixed mortgage today but keep in mind that the rate will change with the market. Many people are more comfortable having consistent mortgage payments for the entire length of the loan as provided by a fixed mortgage. You have to choose the mortgage that you can afford now and long term regardless of the interest rate. Remember – time is money.
At 1st Alliance Lending we partner with homebuyers to help them through the process. We frequently work with first time homebuyers and can help you determine what is myth and what is reality in the home buying process. Contact us for more information.
If you are a first time homebuyer, it’s easy to make very expensive mistakes during the purchasing process. Instead, take this opportunity to learn from the missteps of others, so your first time home buying experience goes as smoothly as possible. Here are some common lessons to learn from other homebuyers:
Evaluate what you can really afford both now and in the long term
It is possible the lender will tell you that you can afford more than you really can comfortably afford. Remember, you will need to pay for taxes, insurance, home improvements, and furnishings for your new home. You need to have money budgeted to accommodate these expenses. Consider your personal situation. Will you be looking to buy a car in the near future? The lender is not aware of your planned future purchases. If the lender approves you for $100,000 consider buying a house closer to $80,000 to safeguard your financial security.
In addition consider the long-term future. Will you have children? If so, you will need to factor in paying for daycare or potentially reducing family income so one parent can stay home with the children. Do you want to save for private school or college for your children? What about your own retirement? Consider leaving yourself the ability to save some money or take on new expenses.
Don’t be afraid to look at the details of the house
It may feel strange to open the closets and cupboards and look under the bed when you are in someone else’s house but you have to get past your politeness. If you buy this house, you will own every aspect of it. If the pipes leak into the cupboard or the house has a major infestation you want to know that BEFORE you buy. When you are looking at homes look at every detail. It is also wise to request a home inspection prior to purchase. You will want to know if the home requires thousands of dollars of repair before you sign on the dotted line as opposed to finding out after you have moved in.
Talk to the neighbors before you buy
Neighbors can really make or break your homeowner experience. If they have dogs that bark at 5am or loud parties that last until 2am you will want to know before you make the purchase. When you are at the house to check it out. Feel free to walk over to the neighbors and say hello. See what kind of impression you get. Ask the neighbors about other neighbors to see if there is any neighborhood battle going on. It is likely if one neighbor has a dog that barks incessantly, it will not only disturb you but is also currently disturbing the rest of the neighborhood.
Buying a home is exciting. It’s easy to think “Wow, the lender approved us for a huge mortgage and this house looks perfect” after a 10 minute walk-through. Buying a home is a huge commitment in time, money and your life. All of the details need to be completely evaluated. What level mortgage are you comfortable with, regardless of what you have been approved for? Have you really closely evaluated the house and the neighbors to make sure this is the house you really want? At 1st Alliance Lending, we would be happy to help you through the first time home buying process. Contact us to learn more.
If you have recently suffered a foreclosure or short sale, you may wonder if the FHA “Back to Work” program will still be in place when you are ready to buy a new home. The FHA “Back to Work” program was created by the Federal Housing Administration to help people who faced extenuating financial circumstances become homeowners again. If a borrower can show they experienced a 20% loss of income for 6 months or longer and this caused them to short sale or foreclose they are eligible for the FHA “Back to Work” program. Two major advantages of this program are the ability to own a home again after 12 months and lower down payment requirements.
The good news is the FHA “Back to Work” program has been extended to September 30th, 2016. According to RealtyTrac, March 2014 was the 42nd consecutive month where U.S. foreclosure activity decreased. Although this is good for the U.S. Economy, there are still thousands of foreclosures each month. Over 117,000 U.S. properties had foreclosure filings in March 2014 and over 341,000 had a foreclosure notice in the first quarter of the year. This means that one in every 385 U.S. households had a foreclosure filing this year. So many people are still finding themselves affected by financial issues. It is certain that a significant number of people faced economic issues out of their control such as a loss of job or reduction in income. Since it often takes years for the foreclosure filings to be finalized these foreclosures may have been a result of economic hardship from a few years ago as well. The FHA recognizes that people are still facing extenuating circumstances and has extended the “Back to Work” program accordingly.
If you have recently faced foreclosure or short sale consider taking the following steps to prepare yourself to return to homeownership:
- Do your best to pay all of your bills on time to improve your credit score
- Pay down any debt you have as much as you possibly can to reduce your utilization rate.
- Try to save up for a down payment.
- Start looking for a lender you will feel comfortable working with.
At 1st Alliance Lending, we are “Back to Work” program lenders. We would be happy to help you obtain a new home. We pride ourselves on creating sustainable loans so you will not face foreclosure or short sale again in the future. Contact us to learn if you qualify for the FHA “Back to Work” program.
Buying a home for the first time can be overwhelming. Many first time homebuyers are not aware of all resources they have at their disposal, until after they have finalized the sale. Uninformed buyers tend to make hasty decisions, ones they later regret.
If you are a first time homebuyer in the market for a new home, take a minute to read this report. Here are 6 things 1st Alliance Lending thinks you need to know about first time homebuyers programs. One important aspect of choosing the best first time home buyers programs is to find out what different types of mortgage programs there are. Find out what they offer, and most importantly, which ones you qualify for. There are some steps you can take on your own, to help you prequalify for a first time homeowner’s loan as well.
- Ask about the new FHA “Back to Work” mortgage. This mortgage is designed to assist families who are struggling to get back on their feet, financially. This is a relatively new program. The wait time for this program is 12 months. If you can show you have recovered from your financial hardship, after one year, you may be able to obtain this loan. Having a foreclosure does not count against you, or disqualify you..
- Improve your credit score before applying for a mortgage. Many lenders won’t tell you, that your credit score affects the amount of money you pay for a down payment, the percentage of your interest rates and the amount of your monthly mortgage payments, but it does. Start by obtaining all three-credit reports, and checking them for accuracy. Pay off as many bills as possible..
- Pre-qualify for a loan. Once you have improved your credit score, you can now apply for a loan. Get the best rates, with the lowest interest rates. Be sure to read the fine print. What you don’t know can hurt you in the future. Ask questions, and never agree to a contract, unless you understand the terms..
- Choose your own lender. You have the option of choosing a lender that is perfect for you. No one knows better than you, what you can and cannot afford to pay in mortgage payments. Choose a lender that is willing to work with you, not against you..
- Ask a realtor to help with your search. Let the realtor know that you are a first time homebuyer, and you are looking for a home within a specific price range. The realtor may give you a complete listing of homes in which you can afford. Look over the list thoroughly, and visit the homes that peak your interest..
- Negotiate the price. The asking price is not necessarily the price you have to accept. Owners, including banks and lending institutions, might consider lowering the prices of most homes, if the buyers will only ask. Therefore, use your voice of influence and ask for a better deal. Negotiation might work best on homes that have been idly sitting on the market for months or years.
To talk more about the first time homebuyers programs, or to see how we can help you, please contact us.
How should a homebuyer choose a lender? This is an important decision, as the lender will be overseeing your 15-30 year mortgage. You are entering into a long-term relationship with the lender. It can be hard to evaluate which lenders are in business to help people and which are just looking to make money. If a previous lender has burned you you are even more likely to wonder how to determine your new lender will treat you fairly. At 1st Alliance Lending, we operate with integrity, but it can be difficult to prove that to a skeptical homebuyer. We’re proud to say that an independent study identified our company as a quality organization.
The Hartford Courant conducted a business ranking and instead of measuring workplaces by common aspects like wages and benefits, they asked employees how they felt about working for that organization. 660 organizations were nominated and employees were asked to complete confidential surveys by a third party research firm (Workplace Dynamics LLP). Only companies that made the list were identified to The Courant.
1st Alliance Lending is proud to have made the Hartford Courant Ranking! We strive to provide our employees a stimulating work environment and the quotes they gave indicate we have been successful. In addition they show our employees are proud of the good work we do. Here are some of the anonymous quotes from our employees:
“I believe in what we do and how we are helping people.”
“Helping people that deserve a second chance.”
“The company culture is great.”
If you are looking for a lender that has integrity contact us. 1st Alliance Lending works with homebuyers to create sustainable loans. We would be happy to show you we are trustworthy and ready to guide you through the process of obtaining a new home loan.
If you had a foreclosure or short sale you may be feeling hesitant to trust another lender. During the recession some lenders set homebuyers up for failure so they could profit off of fees when mortgage payments were missed. Other lenders did not offer mortgage modifications to those who needed them, in order to maintain their mortgage. People not only faced financial hardship due to job loss or reduction in wages, but greedy lenders took advantage.
1st Alliance Lending is a lender with a conscience. We strive to achieve successful mortgages for homebuyers. We want you to be able to make your mortgage payment today and into the future. You may wonder why you should trust that 1st Alliance Lending wouldn’t treat you in the same way your previous lender did. Here are three reasons you should trust 1st Alliance Lending:
Our References and Rankings
It is always a good idea to check the Better Business Bureau (BBB) before partnering with a lender. The BBB provides free business reviews. You will be able to see if there are any complaints against the lender. If complaints exist were they closed? In addition the BBB has accreditation standards that a company should meet and you will be able to see if there are any government actions against the lender. For 1st Alliance Lending you can see our BBB standings here.
It is also worthwhile to look at the 1st Alliance Lending ranking. Our employees are proud to work for a lender that is helping people have a second chance at home ownership and it is reflected in our ranking.
We have a proud history of working to help homeowners avoid foreclosure. In 2008, we worked with government entities to improve the Hope for Homeowners (H4H) program so that it could help a greater number of homeowners. In 2011, 1st Alliance Lending was featured in the NY times as recognition for loss mitigation products offered to struggling homeowners. In 2012, our founder John Dilorio, testified before a Senate subcommittee in recognition of his role as an expert in the field of principal reduction refinance. Our history speaks for itself. We have helped homeowners prevent foreclosure. We use the knowledge we gained from helping those in financial hardship to help provide new homeowners mortgage options that they can be successful with long term.
We guide our decisions by being fiscally responsible and socially and environmentally conscious. We believe it is important to give back to the community. We pride ourselves on providing a work/life balance for employees. Keeping our employees happy and stimulated is a priority. We want to rebuild communities one home at a time. Our philosophy indicates we are an honest lender.
If you are looking for a lender you can trust that will work with you to achieve a sustainable loan, please contact us. At 1st Alliance Lending we have integrity.
If you are a first time homebuyer you likely have numerous questions. The answers below to common questions of a first time homebuyer should help.
How much money do I need to have to buy a home?
When purchasing a home you will be responsible for paying a down payment and closing costs. The closing costs are the amount of money required to process the paperwork to create the mortgage. Once you submit your loan application, the law requires the lender provide you a Good Faith Estimate (GFE) within 3 days. The GFE will give you a close approximation of what the closing costs will be.
The down payment is the percentage of the home cost that you are going to pay for the house out of pocket at closing. It will obviously depend on the price of the home you are purchasing. Traditionally a 20% down payment is suggested but that is often too much money for a first time homebuyer. The Federal Housing Administration (FHA) offers loan options that require a lower down payment amount (as low as 3.5%) so this may be a good option for you.
What is a ‘term’ of the loan and which ‘term’ should I choose?
The ‘term’ of a loan is the length of time you will be paying the loan. Options are typically 15 years, 20 years and 30 years. At the end of the ‘term’ you will own the house completely and will no longer need to pay mortgage payments. Although a shorter loan may seem ideal keep in mind that the monthly payments will be significantly higher. A longer loan will mean you will pay more interest over the life of the loan however. If you itemize your taxes you can deduct the mortgage interest.
When deciding which term is right for you consider if you can afford the monthly payments now and in the future. For example, if you plan to have kids in the future you may want to choose a longer term, lower monthly payment loan, because you will likely have childcare expenses in addition to your mortgage.
Can I buy a home if I have bad credit?
Even if your credit isn’t perfect you may be able to buy a home. At 1st Alliance Lending we look at more than just your computer generated credit score. We believe in evaluating the entire situation and want to know your personal story.
What if I have more questions?
If you have additional questions don’t hesitate to contact us at 1st Alliance Lending. We frequently work with first time homebuyers and are happy to answer all of your questions. We will assign you one loan officer and provide you the loan officer’s direct extension and email so you can ask any questions you have. We would be happy to help you buy your first home!
If you are looking to buy a home you should do some research on potential lenders prior to selecting one. You will have a relationship with the lender from day 1 until you have paid your final mortgage payment, which is often 15-30 years later. Regardless of your situation (first home, purchasing a home after foreclosure or short sale, etc.) you will want to make sure you are comfortable with the lender selected for your new home mortgage loan.
If you have heard of 1st Alliance Lending you may have know what makes us different from other lenders. We believe our personal touch differentiates us from other lenders. Here are some of the features that we think highlight why we are the best choice in lenders.
1st Alliance Lending is recognized as a leader in helping borrowers that had a previous foreclosure or short sale obtain a new home. 1st Alliance Lending has also helped thousands of borrowers avoid foreclosure. We continue to work with borrowers who have faced or are facing financial hardship. We also use our experience to help first time homebuyers establish a mortgage they will be successful at today and long into the future. We have seen it all and know what works and what doesn’t work. We pride ourselves on creating sustainable loans.
1st Alliance Lending specializes in FHA Back to Work loans which allow homebuyers who have had a previous foreclosure or short sale obtain a new home in as little as 12 months. We can provide you the details of the Back to Work loan program including requirements and the process.
Welcome Home Specialists
Our Welcome Home Specialists are our loan officers. We assign one to each homebuyer so you will only be in contact with one person. That person will know your situation and your needs. You will be provided their phone number and email so you can contact them with any questions you have. They will take the time to walk you through the home buying process. Your Welcome Home Specialist can evaluate your financial circumstance and make sure you understand the details of your mortgage. They can provide you guidance to improve your credit if needed. At 1st Alliance Lending you will have the one advisor who will focus on you and guide you from beginning to end.
Evaluate More Than Just Credit Score
Most lenders will just look at a computer generated credit score to determine if they want to work with a homebuyer. We believe that people are more than a number. We realize that many people experienced financial hardships that were beyond their control such as loss of job or overwhelming medical expenses. We take the time to listen to homebuyers to find out their story. We want to figure out what works and what doesn’t for you so we can find a way to help you achieve the dream of homeownership again.
1st Alliance Lending is a company with integrity. We believe who you choose for your lender is just as important as which house you decide to buy. Contact us to learn more about 1st Alliance Lending and how we can become your lender partner.