Sunday, September 22, 2013 / by Tom Nickley
The federal housing authorities are trying to make it easier for people who lost their home to short sale, foreclosure or bankruptcy due to the economic downturn five years ago to qualify for a new mortgage.
Last month, The Department of Housing and Urban Development (HUD) changed it's rule requiring a three year waiting period for people who lost their home to foreclosure or bankruptcy. The new ruling opens the door to purchasee another home after one year as long as they have fixed the financial problems that caused them to lose their home.
This is the latest effort to help boost and maintain the growth that we are currently seeing in the housing industry. This is especially important at a time when interest rates have been moving up and new mortgage applications have been declining. The HUD's rule change should make more people eligible for mortgages, even if their credit was tarnished during the economic downturn.
While the rule change is great news for many, it is not required that banks and mortgage lenders have to abide by it. The financial institutions will now have the option of reducing the waiting time to one year for troubled borrowers who have fixed their situation. While the ruling is an effort to lower the standards for mortgage loans, it will take time to see how lenders react with their own lending policies.
For howeowner's that could possibly be affected by the ruling, the most important thing that you can do is make sure that the problem is fixed. You must show a record of making at least 12 months of on time payments on all credit accounts & that you've cleaned up any blemishes from the past. By showing that you have taken control of your financial situation, lenders will have more confidence when considering your application.
Our preferred lender, Movement Mortgage, was one of the first companies to announce that they were opening their doors to accepting applications just a year out of short sale or foreclosure. On top of that, in an effort to help more potential home buyers qualify, Movement recently changed there credit score qualification to a 580 for FHA and VA buyers, which was previously at 640.
If you think you may qualify or have any questions regarding the new ruling, the first step is to talk to a mortgage lender. Contact us and we will be happy to put you in touch with one of our preferred lenders who will be happy to answer any questions and offer any advise that you may need.