The Advantages of New Home Mortgage Loans

Online home mortgage loans now offer shorter waiting periods among other advantages for families with extenuating circumstances

The Federal Housing Administration’s new home mortgage loans are saving numerous Americans from the housing market crash of 2008. As of August of last year, borrowers who have faced extenuating circumstances have a program specifically designed for their financial struggles.

If you have faced foreclosure or another economic event that significantly reduced your credit score, and caused you to lose your home and your job, you may be eligible to apply. Check out these top-four advantages of applying for the “Back to Work” online home mortgage loans program.

1. Shorter waiting periods

After foreclosure, short sale and deed-in-lieu, the typical waiting period is three years. The waiting period after bankruptcy is normally two years and other economic events can last up to seven years. Through the “Back to Work” program, families battling extenuating circumstances can apply for a new mortgage only twelve months after losing a home. This is a dramatic and life-altering change for lenders and their borrowers.

In order to qualify for the reduced waiting period, the borrower must be able to provide proof of an economic event and a reduction in income of 20 percent or more for a period of at least six months. This can be documented through a federal tax return, W-2 form or written verification of employment.

2. Efficient rates

The “Back to Work” program allows families to put 3.5 percent down with no premiums nor fees at closing. Rates are the same as other FHA loans. Your mortgage rate will be unaffected by the “Back to Work” program. With other lending programs, a poor credit history could significantly change your repayment schedule. The program does not accept borrowers with credit scores below 500. However, borrowers with no credit score remain eligible.

3. Housing counseling

The FHA requires “Back to Work” borrowers to attend at least one hour of one-on-one housing counseling. Some borrowers may frown upon this requirement, but it is quick and very beneficial to the borrower. During counseling, borrowers learn how to become better prepared for future financial shocks, how to avoid scams, and how to create and manage a household budget. The FHA hopes that by requiring counseling, borrowers will be less likely to suffer a reoccurrence. The counseling agency must be approved by the U.S. Department of Housing and Urban Development. For a list of approved agencies, visit www.hud.gov.

4. Guidance designed for your situation

Lenders who provide the “Back to Work” program are understanding and willing to work with your financial situation. Good lenders are good listeners. Although applying for a new home loan after an economic event is stressful, lenders are excellent communicators and will disclose all fees and costs upfront. Search for a lender who has your best interest. Mortgage lenders should view you as a life-long customer, since you could be committing to a long-term repayment schedule.

Amanda Parkar has  an experience in writing on financial lending. She has been writing on various topics such as, New home buyer loans and back to work program.