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RECENT FORECLOSURE? SHORT SALE? BK? NEW, RELAXED RULES WILL HELP SOME BUYERS USING FHA FINANCING!

FHA ENACTS NEW LOAN QUALIFICATION RULES REDUCING WAIT TIME AFTER FINANCIAL DISTRESS TO AS LITTLE AS ONE YEAR!

Over the last few years, during the depth of the recession, many folks who previously had stellar credit records faced hard financial times.  Facing an underwater mortgage, while still needing to move from their current home, some had to complete a Short Sale.  Others faced more dire consequences - Foreclosures, in cases where Selling Short was not approved by their Mortgage Lender, or if there was no other option due to unemployment or other unforeseen situation.  A few were forced into Bankruptcy,  rather than facing the tax consequences of walking away from a huge mortgage debt.

Now, however, those financing with FHA Loans, may be able to reduce their waiting times for possible loan approval to only one year after completion of such Financial Distress.  Previously, the likely wait period was two years for homeowners selling short, or three years for families having a Foreclosure, or a Discharged Bankruptcy.

As reported in the Chicago Tribune, by Real Estate Columnist Mary Ellen Podmolik, potential FHA Borrowers must pass several financial hurdles to qualify.  First, they must evidence that their household income fell by a minimum of 20% for at least six months, and that the reduction in income was caused by unavoidable circumstances, such as loss of a job, or failure of a business. 

They must also show all of their mortgage payments for the last twelve months (for those currently owning a home) have been paid on time.  Also, prospective borrowers must complete an FHA-Approved one-hour class on responsible home ownership before being approved.

Historically, FHA Loans have been the best option for those with down payments lower than 20%, or less-than-perfect credit.  In such cases, these potential buyers would normally not qualify for other types of conventional financing.  However, new FHA Loans add considerable processing fees, as well as the requirement for payment of a hefty initial and monthly Mortgage Insurance Premium (MIP) for the life of the loan.

However, for those who have went through a bit of their own financial troubles during the Housing Crisis, FHA might be the only viable option, regardless of how much down payment they have saved.

Have questions on what YOUR Financing Options are in today's Real Estate Market?   We have experts on hand to answer your questions!  Call or Email us TODAY!

DEAN MOSS & DEAN'S TEAM CHICAGO

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