Many people who have suffered a foreclosure worry they will never be able to own a home again. The good news is that most foreclosure victims will become homeowners again! If you had a foreclosure, consider taking the following steps to help you achieve the dream of owning your own home again.
If you recently had a foreclosure or short sale, you will be required to wait for a certain period of time before you are able to obtain a new mortgage. The good news is that the waiting period has decreased. If you qualify for the Federal Housing Administration (FHA) Back to Work Program you can own a home again in as little as 12 months. The government has recognized that millions of people lost their homes in the recent economic downturn and wants to help people return to home ownership.
Improve Your Credit
While you are in the waiting period do your best to improve your credit. Make sure you make all payments (credit cards, rent, etc.) on time. If possible pay down your debts, even if it is just a little amount. Paying more than just the minimum amount will be reflected in your credit numbers. The more you improve your credit score, the better your options, such as interest rates, and the variety of available loan programs. You will be one huge step closer to having a new mortgage.
Save Up For a Down payment
If possible, save up for a down payment. The FHA Back to Work Program requires a 3.5% down payment for your new home. Try to save at least 3.5% or even more. This is a great percentage rate. Many other home loan programs require a 20% cash down payment at the time of closing the home loan. That large amount can often be the one factor that determines whether someone can afford a home loan or not.
Complete Required Counseling
The FHA Back to Work Program requires borrowers complete a financial counseling program. The counseling must be finished at least 30 days before applying for a new mortgage but expires after 6 months. So don’t complete your counseling until you are almost finished with the 12-month waiting period.
At 1st Alliance Lending, we have experience helping people who have had a foreclosure or short sale achieve home ownership again. We are an honest, trustworthy lender who will partner with you. We specialize in the FHA Back to Work Program and pride ourselves on creating loans you can sustain over the long term. Contact us when you want to discuss owning your own home.