Mortgage financing after foreclosure gives people an opportunity to avail a mortgage and stay current on their payments by refinancing to a lower rate of interest.
Mortgage financing after foreclosure is a difficult task since erstwhile homeowners find it incredibly difficult to convince mortgage lenders of their credit worthiness. The difficulty in procuring and refinancing a mortgage can be attributed to two factors. The erstwhile home owner's credit score declines by 350-400 points as a result of a foreclosure. The homeowner finds it difficult to procure both installments and revolving credit. Since these are necessary for improving credit scores, the consumer faces the seemingly insurmountable task of building credit scores and convincing the lenders of the prudence of allowing mortgage financing after foreclosure.
Mortgage Financing After Foreclosure
Although, the recent sub-prime crisis has made it difficult for people to buy a home after foreclosure, people may still be able to procure mortgage loans meant for bad credit consumers and then refinance to a lower or a more favorable rate of interest. The Federal Housing Administration (FHA) is willing to provide home loans to people who have a foreclosure on their record. Since the 1980s, the FHA also allows streamline refinancing option for FHA mortgage holders. The term 'streamline' refers to refinancing without the usual paperwork hassles.
Obtaining an FHA Insured Mortgage
An FHA-insured mortgage can be used to purchase or refinance a new or an existing one-to-four unit home, a condominium, a manufactured home or a mobile home. The borrower can opt for an FHA insured loan provided 3 years have elapsed from the date of the foreclosure sale. These loans carry a government guarantee that protects the lender in the event of default. Although, the borrower is expected to make a down payment of just 3.5 percent of the purchase price of the property, these mortgages do not require private mortgage insurance (PMI). A credit score in the range of 580-620 is sufficient for availing an FHA insured mortgage. The borrower is expected to pay a premium for the guarantee provided by the government. This premium is paid in two installments. The first installment is paid at settlement and is equal to 1.75 percent of the loan while the remaining is paid along with the monthly mortgage payments till such time the loan-to-value of the mortgage reaches 78 percent of the initial sales price or the appraised value of your home, whichever is less. People, who do not pay the first installment of the premium at settlement, are forced to pay a higher premium that stays in place throughout the term of the loan. An FHA insured mortgage can be refinanced in the following manner.
Refinancing an FHA Insured Mortgage
People, who have an FHA insured mortgage, can refinance their mortgage without having to undergo any credit checks provided they are current on their mortgage payments and their annual mortgage payment history is satisfactory. Approval is not contingent on the income, the asset or the borrower's employment history. Property appraisal is a must if the homeowner desires cash out refinancing. If the consumer just wants to refinance to a lower rate of interest, there is no need for property appraisal. If the homeowner is trying to refinance a loan, that was procured in the distant past, it may be possible to obtain a refund on the mortgage premium. The amount of refund may be applied towards the upfront premium required for the new mortgage. The process of refinancing an FHA mortgage is streamlined which is the same as saying that the process does not involve heavy paperwork.
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Mortgage financing after foreclosure is a difficult task since erstwhile homeowners find it incredibly difficult to convince mortgage lenders of their credit worthiness. The difficulty in procuring and refinancing a mortgage can be attributed to two factors. The erstwhile home owner's credit score declines by 350-400 points as a result of a foreclosure. The homeowner finds it difficult to procure both installments and revolving credit. Since these are necessary for improving credit scores, the consumer faces the seemingly insurmountable task of building credit scores and convincing the lenders of the prudence of allowing mortgage financing after foreclosure.
Mortgage Financing After Foreclosure
Although, the recent sub-prime crisis has made it difficult for people to buy a home after foreclosure, people may still be able to procure mortgage loans meant for bad credit consumers and then refinance to a lower or a more favorable rate of interest. The Federal Housing Administration (FHA) is willing to provide home loans to people who have a foreclosure on their record. Since the 1980s, the FHA also allows streamline refinancing option for FHA mortgage holders. The term 'streamline' refers to refinancing without the usual paperwork hassles.
Obtaining an FHA Insured Mortgage
An FHA-insured mortgage can be used to purchase or refinance a new or an existing one-to-four unit home, a condominium, a manufactured home or a mobile home. The borrower can opt for an FHA insured loan provided 3 years have elapsed from the date of the foreclosure sale. These loans carry a government guarantee that protects the lender in the event of default. Although, the borrower is expected to make a down payment of just 3.5 percent of the purchase price of the property, these mortgages do not require private mortgage insurance (PMI). A credit score in the range of 580-620 is sufficient for availing an FHA insured mortgage. The borrower is expected to pay a premium for the guarantee provided by the government. This premium is paid in two installments. The first installment is paid at settlement and is equal to 1.75 percent of the loan while the remaining is paid along with the monthly mortgage payments till such time the loan-to-value of the mortgage reaches 78 percent of the initial sales price or the appraised value of your home, whichever is less. People, who do not pay the first installment of the premium at settlement, are forced to pay a higher premium that stays in place throughout the term of the loan. An FHA insured mortgage can be refinanced in the following manner.
Refinancing an FHA Insured Mortgage
People, who have an FHA insured mortgage, can refinance their mortgage without having to undergo any credit checks provided they are current on their mortgage payments and their annual mortgage payment history is satisfactory. Approval is not contingent on the income, the asset or the borrower's employment history. Property appraisal is a must if the homeowner desires cash out refinancing. If the consumer just wants to refinance to a lower rate of interest, there is no need for property appraisal. If the homeowner is trying to refinance a loan, that was procured in the distant past, it may be possible to obtain a refund on the mortgage premium. The amount of refund may be applied towards the upfront premium required for the new mortgage. The process of refinancing an FHA mortgage is streamlined which is the same as saying that the process does not involve heavy paperwork.
Read more on:
- Getting a Mortgage After Foreclosure
- Mortgage Refinance
- Mortgage Loans After Bankruptcy
The last article may provide some idea about mortgage financing after bankruptcy.
Hopefully, the article would have provided valuable insight on mortgage financing after foreclosure. The biggest advantage of availing an FHA insured loan is that, borrowers may be able to use the anticipated $8000 tax credit for availing a short term loan from a housing finance agency, assuming that they bought their first house 3 years ago. Read more on first time home buyer tax credit. The loan can then be used to fund the down payment required for an FHA insured mortgage.
Hopefully, the article would have provided valuable insight on mortgage financing after foreclosure. The biggest advantage of availing an FHA insured loan is that, borrowers may be able to use the anticipated $8000 tax credit for availing a short term loan from a housing finance agency, assuming that they bought their first house 3 years ago. Read more on first time home buyer tax credit. The loan can then be used to fund the down payment required for an FHA insured mortgage.
Wow, theres some nice links there - where do you find them all? I’m going to read all those through in detail and apply a few.. Thanks for sharing!
ReplyDeleteIt is very hard to find something through online. I have got news from your site. It has taken 2 days. So i am giving thanks to admin. If you elaborate more it will be more helpful.
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