The Federal Housing Administration (or FHA) has announced in one of their recent letters that borrowers who have suffered hardship and had to go through Foreclosure, Short Sale or Bankruptcy are now able to obtain financing within one year of these events. So, if you have lost your job or had some event that has caused you to receive less income, and you went through one of the aforementioned events, you will only need to wait one year before being eligible for FHA financing. This is big! They have reduced this time by more than half. Granted, it is an FHA loan and the mortgage insurance premiums they are requesting are inflated and tough to swallow since their recent increases, nevertheless- this is allowing people to get back into home ownership. Here would be a perfect example of how to use this financing:
- Your home was foreclosed upon last year because you lost your job due to layoffs at your former company.
- You are now gainfully employed and have been for at least 3 months.
- Your current income allows you to qualify for a renovation loan to buy a "fixer upper" property.
- You buy the home for $200,000, put $80,000 of renovation into it, and it appraises for $350,000 a year later.
-You complete a refinance a year after the purchase, when your credit is rebuilt and you qualify for conventional financing.
-This enabled you to buy a home, remodel, and refinance with no mortgage insurance in about a 20 month window.
Of course there are many variables involved in this example, but it remains doable and a very profitable venture.
As always, we are available at www.FirstAmericanMortgage.net to discuss this blog or any other finacing questions you may have.
Thank you very much!