The housing crisis that occurred in Phoenix previously left a large number of people needing to sell via short sale or foreclosure. Many were forced to become renters after selling their home. However, with the rebound of the housing market, it has become possible for many who had previous short sales or foreclosures to purchase a new home.
For home buyers looking to purchase again there are certain guidelines that must be met before qualifying for a new mortgage. If applying for a FHA loan, you must have completed a short sale or foreclosure 3 years previous to application of a new mortgage, However, as of August 2013, if buyers meet the criteria for the “Back to Work” program criteria, they will meet eligibility for a FHA loan after one year rather than three. Criteria includes a history of 20% reduction in income, the reduction must have lasted at least six months and the reduction must be tied to an economic event beyond the buyer’s control. In addition, the short sale or foreclosure must be tied to the economic event. Lastly, the borrower must have reestablished their credit during the twelve months and commit to completing specific home buyer education to use the “Back to Work “ program.
For those applying for a VA loan, there is no waiting period required if Automated Underwriting Approval is completed. For buyers who experienced a foreclosure, only two years from the date of discharge is required.
Potential homebuyers can increase their chances of getting a mortgage can take steps to increase their opportunities. First, take out a major credit care to re-establish your personal credit history. Remain employed at the same job for a year to two. Additionally, by saving 10-15 percent of the purchase price for a down payment and pay all bills on time.
Experiencing a short sale or foreclosure does not have to mean buying a new home is out of reach. New financing and a recovery of the housing market has opened up a number of opportunities for home buyers.