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.