Finding the Best Home Mortgage Loans after a Short Sale

If you have previously gone through a short sale you are not closed off from obtaining a new home loan. You just have to make sure that you meet the necessary requirements that have been set up by the FHA. This is regardless of whether or not at the time of the short sale you were delinquent or current on you payments. In the event that you were not delinquent you will find that your application is favorably considered. In order to qualify for the best home mortgage loans under these circumstances you will need to have a 12 month record of mortgage payments made in time before the short sale. You will also need to show that the creditors you pay in installments were also settled within 12 months.

One of the things that are important to note when you are applying for this loan is that the FHA does not just take note of how well you paid off your mortgage, but on how well you did on your other debts as well. With the new back to work program, many who have gone through a short sale may get a respite even though they were not able to pay off their other debts sufficiently or in time. This program is a lot more lenient than the previous ones.

In order to qualify for this program after your short sale you will need to show proof that you had lost your job or your source of income such as a business that had suffered. The circumstances leading to this loss need to be out of your control. You will also need to take a counseling class on home ownership. If you skip this important requirement your loan will be denied. This housing counseling only takes an hour and is therefore not tedious. Every person asking for a loan under this program is handled as an individual to ensure that they get time to speak up and discuss the events that caused the short sale and how they have recovered from the said economic downturn.

If you follow the FHA’s guidelines, you can find some of the best home mortgage loans. You will, however, need to ensure that you have all of your ducks in a row. Paperwork such as your W2’s and tax returns need to be part of the application as proof of your economic event. If you had to shut down your business you will need proof of that as well. For those who were fired from a job, your letter of termination will be important. With this documentation get a qualified underwriter who will do a good job of filing the application so that you can get the money you need to purchase your dream home.

New Home Buyer Loans to Choose From

It is time for you to buy a new home, in fact you have been thinking about it for a while now. The time is right. You have looked at your goals and worked through the amount of money you have. You can afford a mortgage and there are many different types available. There are several kinds of new home buyer loans available and all you have to do is pick one.

One type of mortgage that is available to you is a fixed rate mortgage. This one is popular because the borrower tends to be protected from hikes in the amount of money they pay from one month to the next. It is a straight forward mortgage. The advantages of this kind of home loan include its stability. You know what you need to pay every month for both the principle as well as the interest. The amount remains the same for the duration of the loan repayment. In addition, whether the interest goes up or not, the payments do not change.



This is something to think about even as you make your decision. This kind of loan makes sense when you are making plans to live in the same house for many years or when you want to work with a strict budget. When you know what the amount you are required to pay per month is, you can make plans with ease.

If you have had an economic event that has adversely affected your finances you would need to consider a back to work loan as your first one. This loan allows you to make a new start if you have had some financial challenges in the past. It is among the new home buyer loans but can also be taken out by those who have owned a home previously and lost it. If you have suffered foreclosure, forbearance, bankruptcy, a short sale or anything of that sort you can get a loan that will allow you to own a home again.

This loan is a great idea because the down payment can be as low as 3.5% and the interest rates are not any higher than those of a regular loan. One of the things you will need to prove before you can get such a loan is that you suffered an economic event and you were a responsible debtor. With such information you are simply reinstated back to the place that you were before.

You will, however, need to prove that you have recovered from the economic event that affected you. Make sure you have a source of income and your credit history is clean for a period of 12 months.

Looking for a Back to Work Mortgage Loan? Read This First

If you are shopping for a back to work mortgage loan, you will need to show your lender that you are in economic recovery. Having been through an economic event such as foreclosure, deed-in-lieu, short sale or bankruptcy, there is certain proof that you will need to provide in order to qualify for a loan. This should not cause you any alarm, however. Just read on and find out what the requirements are.

To begin with you will need to prove that the credit impairments attached to your Social Security Number were because of an economic event that was beyond your control. In addition, you will need to prove that your household income was severely affected. The event could be that you lost your job or other source of income. You will also need to show that you have recovered fully financially from the adverse economic event. Finally you will need to go through HUD housing counseling so as to qualify to move into the next step of the process.


FHA back to work program by 1stalliancelendingllc

In order to prove that you are in full economic recovery you will need to show that your credit history is on the up and up. That means that you are well able to pay your housing costs on time and that you are not making your payments in installments. If you have revolving accounts you will also need to show that you are paying those on time. With 12 months of satisfactory payments, you will have passed one stage of the qualification process for the back to work mortgage loan. If you have a loan modification it is important to show that you are making your payments in a timely fashion and in full.

The other requirement that must be met is one that qualifies your situation to be termed as an economic event. That means that you will need to show that the reduction of household income was 20% or more than that. This loss must have been experienced for at least 6 months in order for you to qualify for a back to work home mortgage. In order for these requirements to be met it is important that you provide the necessary documentation for purposes of underwriting as well as loan approval.

The documents you will be required to produce will include confirmation that your income was reduced by at least 20% for at least six months. You will also need to show proof of loss of income or employment. Proof of this will be in your W2s as well as your tax returns. You may also be required to produce documents showing that you closed your business or an employment termination letter. Be sure to have all your documentation in place so that you can present them as needed for the success of your loan application.

FHA Launches Back to Work Program

Mortgage lenders work with housing market crash victims

The 2008 housing market crash created millions of foreclosed homes alongside millions of families in negative financial situations.

The Federal Housing Administration (FHA) released Mortgagee Letter 2013-26 on August 15 of last year, which states, “As a result of the recent recession, many borrowers who experienced unemployment or other severe reductions in income were unable to make their monthly mortgage payments and ultimately lost their homes to pre-foreclosure sale, deed-in-lieu or foreclosure. Some borrowers were forced to file for bankruptcy to discharge or restructure their debts.”



The letter brought forth FHA’s “Back to Work - Extenuating Circumstances program,” which allows families facing an unfortunate economic event to apply for a new mortgage only twelve months after losing a home.

The program waives lending agencies’ traditional three-year waiting period after foreclosure, short sale and deed-in-lieu, and bankruptcy’s traditional two-year waiting period. Borrowers may put down only 3.5 percent with no premiums nor additional fees at closing. Mortgage rates are the same as other FHA rates.

To be eligible, borrowers must be fully recovering from their economic event. “An economic event is any occurrence beyond the borrower’s control that results in loss of employment, loss of income or a combination of both, which causes a reduction in the borrower’s household income of 20 percent or more for a period of at least six months,” Mortgagee Letter 2013-26 states.

To prove a full recovery, borrowers must show at least twelve months of credit history that is clear of late housing, installment debt payments, derogatory credit issues and delinquency. Credit scores below 500 are not allowed, but borrowers with no credit score remain eligible.

Back to Work program lenders must be able to verify and document a loss of employment by receiving written verification of employment that shows evidence of a termination date or where the borrower’s prior employer is no longer in business.

Borrowers facing Chapter 13 bankruptcy who have yet to be discharged must gain written permission from the Bankruptcy Court to begin a new mortgage. Such document is to be given to their lending agency.

Another way FHA is working with “Back to Work” borrowers is by requiring one hour of housing counseling. The counselor must be approved by the U.S. Department of Housing and Urban Development and address the cause of the economic event.

Mortgagee Letter 2013-26 states, “FHA is continuing its commitment to fully evaluate borrowers who have experienced periods of financial difficulty due to extenuating circumstances.”