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John Paul Mulchay

Buy a Home After Short Sale (or Bankruptcy or Foreclosure)

Thursday, March 13, 2014 - Article by: John Paul Mulchay - Freedom Mortgage - Message

Many responsible homeowners were severely impacted by the economy over the last 5 years or so and were forced to make difficult decisions about their finances. For some it came down to food on the table or pay the mortgage, and that is not really a difficult decision. Thankfully, the economy appears to be improving and homeowners who were forced to make difficult decisions have now regained full time employment or have found new jobs and are on more solid ground. I am constantly being asked, "When can I buy a home again?"

I offer a unique program which allows potential home buyers the opportunity to purchase a home one year after a Short Sale, Bankruptcy, or Foreclosure, if certain criteria are met.

With interest rates still near historic lows and housing prices steadily increasing in most areas, it makes sense that many previous homeowners would like to own a home once again. Conventional loans do allow for a purchase after a two year waiting period (post credit event), but that would require a 20% down payment. For many potential homebuyers, that is a pretty lofty goal after losing a home. If you meet the criteria for the Back to Work program, the required down payment is no more than 3.5% of the purchase price and only one year must have passed since the credit event.

There is some nuance to this program and working with a lender who fully understands the qualification criteria will increase your chances of successfully qualifying to purchase again. The basic parameters used to determine if you may be eligible include:

  • certain credit impairments were the result of a Loss of Employment or
  • significant loss of Household Income beyond the borrower's control;
  • borrower has demonstrated full recovery from the event; and,
  • borrower has completed housing counseling.

While these are the first questions to ask, as I said before, there are some very specific thresholds for your lender to evaluate in order to see if you qualify.

Feel free to contact me for a complimentary evaluation of your particular circumstances to see if homeownership through this program is right for you. And if you are a real estate professional, I will be happy to share my knowledge with you and your clients.

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