January 22, 2019 in Bankruptcy
During times like this more and more Americans have found themselves to be faced with the prospect of foreclosure or bankruptcy. American society puts a high value on owning a home and for many people it is a source of personal wealth and pride. For the many people who have been through the foreclosure process or filed for bankruptcy protection, being able to purchase a new home and start over again seems like it is an unattainable dream.
There is good news though, recent interviews with people in the housing industry (builders, realtors and lenders) suggest that people who have been through the foreclosure process or have filed for bankruptcy protection are often able to return to homeownership sooner than previously thought. There are steps to take though in order to attain the dream of homeownership again.
Getting back on track
Foreclosures and bankruptcies often stay on someone’s credit for 7 years or more. Because of this you must take deliberate steps towards rebuilding your credit as soon as you possibly can. Consistently making bill payments on time, paying down credit cards, lowering other debt, and avoiding going into additional debt can cause credit scores to be dramatically improved within months of being discharged from bankruptcy or completing the foreclosure process.
Many experts say that many people who work diligently at rebuilding their credit and are save money for down payments are able to buy another home within two to 3 years. Federal Housing Agency (FHA) loans are a frequently used way for previously foreclosed upon homeowners to be able to finance a new home purchase. Many former homeowners who have been through a foreclosure or bankruptcy cannot qualify for conventional mortgages and FHA loans have exploded in popularity amongst people with little credit or damaged credit
Generally speaking, conventional mortgages offer interest rates that are lower than FHA mortgages but conventional mortgages often require a downpayment of 20 percent of the price of the home, a credit score of at least 720 and a proof of income. Comparatively, FHA mortgages, only require credit scores of about 620 and a down payment of 3.5 percent of the home’s purchase price, which makes it much more attractive for lower income people or people with little savings.
FHA loans have drawbacks. In addition to higher interest rates, FHA mortgages are subject to a mandatory insurance premium of 1.75 percent of the loan. While this sounds like a lot more money up front, often, these costs can be rolled into the total amount of the loan. Additionally, payments of 1.25 percent of the outstanding balance are required of the homebuyer each year. Many Americans find that FHA loans are a more affordable option despite these drawbacks.
FHA mortgages are not the only available option for homebuyers. Many former homeowners eligible for first-time homebuyer programs and if you qualify for Veterans benefits, you might qualify for a mortgage under the VA. These different programs help buyers to make the down payment and handle the closing costs of the loans. Generally speaking, programs like this are available to homeowners who have not owned a home within the previous three years.
A competent Attorney can help
If filing for bankruptcy is something you’re considering or you find yourself threatened with a foreclosure it can feel like your world is collapsing around you. We cannot state more emphatically that this is not the case. The experienced bankruptcy attorneys of Harmon and Gorove can explain the bankruptcy and/or foreclosure process and advise you on how it will affect your financial situation. Armed with facts, expert analysis and years of experience our team can recommend the best debt-relief option for your particular situation. With the planning, guidance and the expertise of our team your dream of owning a home again can once more become a reality.