After
defaulting on their home loans or doing a short sale on their previous homes in
recent years, some home owners have found a way to buy again, Reuters News
reports.
The
Federal Housing Agency is the main way paving a comeback for these former home
owners to buy again, according to Reuters’ interviews with lenders and real
estate professionals. FHA loans can be an option for some who defaulted on their
mortgage or did a short sale. FHA borrowers usually need a credit score of at
least 620 and a 3.5 percent down payment, which are lower requirements than most
conventional mortgages.
"These
are not mainstream programs geared for mainstream borrowers," Greg McBride,
senior financial analyst at Bankrate.com, told Reuters about former home owners
using FHA-backed loans to get back into home ownership.
Still,
home owners with mortgage defaults on their records often find its a long way to
crawl back into the housing market. They must make big strides in boosting their
credit scores after a foreclosure, short sale, or bankruptcy.
"Most
of the loans that are getting done are for people who have really rebuilt their
credit," rank Donnelly, president of the Mortgage Bankers Association of
Metropolitan Washington, D.C., told Reuters. "They have to prove (to the lender
that) it was something like a job loss that caused this and not chronic
delinquency."
Lenders
will take into consideration why the person lost their home previously, and
they’re much more likely to try again on a borrower who lost their home due to a
job loss than a borrower who walked away on their prior home even though they
could still afford the mortgage payments.
Source:
“Back from Foreclosure to Homeownership,” Reuters News (May 16, 2012)