Understanding New Home-Mortgage Loans

Clarification of lenders’ jargon for FHA’s new home loans

When the Federal Housing Administration (FHA) released Mortgagee Letter 2013-26 this past August, the “Back to Work” program was launched, along with some confusing jargon. Lenders often use terms that only professionals understand to describe victims of the 2008 housing market crash and their financial experiences. Here is a guide that will help clarify your questions while learning the requirements of the program.

Borrower:
A borrower is a person who takes out a loan, promising to return the money and its interest. In the “Back to Work” program, borrowers include both the primary person and secondary person listed on the loan application.

Economic event:
An economic event is any situation that causes a borrower to lose a job or 20 percent of a household’s income for at least six months. Economic events can include foreclosure, short sale, deed-in-lieu, Chapter 7 bankruptcy, Chapter 13 bankruptcy, loan modification or forbearance agreement.

In order to prove a loss of employment, lenders require that their “Back to Work” borrowers verify a loss of employment by providing a document that specifies a termination date or where the prior employer is no longer in business.

The “onset” of an economic event describes the month that the loss of income started.

Household income:
A household income is the total earnings of every person listed on the new home-loans application. These borrowers must also be listed on documents from the family’s economic event. To be eligible, the economic event must have affected everyone in the household.

Housing counseling:
The FHA requires housing counseling for “Back to Work” borrowers, which is a one-hour session with a housing expert, approved by the U.S. Department of Housing and Urban Development. The session may be completed in person, online or by phone. It must be completed in a minimum of 30 days, but no more than six months prior to submitting an application for a new home mortgage loan. Housing counseling enables borrowers to better understand their loan options and obligations, as well as assists borrowers in the creation and assessment of a household budget. Borrowers are taught how to avoid scams and become better prepared for future financial shocks.

Recovery:
Recovery describes a borrower’s financial position after his or her credit history has been positively restored. To be eligible for the “Back to Work” program, a borrower’s twelve-month credit history must be clear of late housing, installment debt payments, delinquency and other derogatory credit issues. Credit scores below 500 are not eligible for the program, but borrowers with no credit score remain eligible.

Getting a Loan from Online Home Mortgage Lenders

One of the ways that you can save yourself some money is by shopping on the internet for online home mortgage lenders. If you find the right one you can score some serious savings. The internet is a place where only the most competitive survive. However, if you are the kind of person who gets confused by too many choices, then this may not be an ideal place for you.

Well, as you begin your search for the right home loan it is imperative that you read and understand the terms and conditions of the loan. You will also need to understand the privacy policies that govern each loan. It is a good idea to look at some of the more trusted sites. Read the frequently asked questions section because they will likely include the questions that you need answered.

Once you engage online home mortgage lenders you will need to provide information about yourself such as your credit score. It is always good to ask where your information will be circulated and how widely because you may be overwhelmed by the number of lenders who give you a call. Remember that some of these online lenders are actually lead generators for companies that do the actual lending. Some of them may lead to 5 or so quotes while others can lead to about 20.

If you have had an economic event, it is important that you find out if some of the listed lenders are back to work program lenders. Remember that even though you may not qualify for regular home loans, you can qualify for this one as long as you meet the necessary requirements. It is also worthwhile to note that these websites have agreements with lenders and if the lender you are looking for is not one of their customers, you will likely not find them listed on these websites.

The number of mortgage websites on the internet is in excess of 1000 and each one is offering you a deal. The competition is stiff but this is good for you. Push for a bargain or a percentage off to ensure that you get a good deal. Approach the lenders directly if you can and see if you can’t have the referral fee accrued to you as savings. Make market comparisons as much as possible and find a deal that adds value. Bear in mind that cheap is not necessarily good. It may actually turn out to be quite expensive. You should do your homework prior to signing up with any lender to help you know the criteria that the lender is using to evaluate your loan application.

Get Back To Work Lenders Online

Online home mortgage loans have been around for a long time. However, many have wondered whether or not it is a wise thing to borrow from such lenders. What we do know is that the Internet is a great place to find the information you need on the products that are available where mortgage lending is concerned. Once you have identified a product that you are interested in, take the next step and contact the lender. This is sound advice even for those interested in finding back to work lenders.

When it comes to finding a lender you will definitely find a competitive one on the Internet. If their rates are not competitive they will not succeed online, so you can be sure that the ones who are thriving on the Internet have great rates. One of the best ways to contact one of these companies is via their online forms. The advantage of doing this yourself is that you will be saving the lender a referral fee and you could have this savings passed on to you.

When getting in touch with your online back to work lenders, you will likely have to fill out 3 forms. The first one is a short inquiry form. This is a form that generally collects your contact information, your name and basically the kind of loan you are looking for and the amount of money you are asking for. In addition, you will need to fill out another form called the pre-application form. This form will ask for more details such as your financial references and your Social Security Number. Finally they will need your full loan application, which you can fill out online.

If you are interested in a back to work loan it is important that you ensure that the lender you are dealing with is FHA approved to offer that kind of loan. For this kind of loan there are specific requirements that must be adhered to if you are to qualify. Since the lender knows about your economic event you will need to make sure that you have gone through the required HUD counseling at least 30 days before and not more than 6 months prior. In addition you will need to have been working for 12 months and on your way to economic recovery. It is important that you have a clean record of debt repayments and bill payments.

The FHA, through the HUD counseling, will be trying to establish whether or not you are a lending risk. Once they give you your certificate of participation it is an indication that you have met their requirements and can now proceed to get your loan.

The Best Home Mortgage Loans for Recovering Families

New home-buyer loans jump start families looking for more promising mortgages

If a family can prove they have had a 20 percent income reduction for a period of at least six months, they may be eligible for what some consider the best home mortgage loans available. After the housing market crash of 2008, many are finding it easy to prove.

According to foreclosure-listing company RealtyTrac, from January 2007 to December 2011, there were over 4 million completed foreclosures and 8.2 million foreclosures in process. This left a large portion of the U.S. without a home and afraid to begin with a new mortgage.

Fortunately, the Federal Housing Administration took charge last August when it released Mortgagee Letter 2013-26, which launched new home-buyer loans through the “Back to Work – Extenuating Circumstances” program.

The program revolves around families facing an economic event, which is “any occurrence beyond the borrower’s control that results in loss of employment, loss of income or a combination of both, which causes a reduction in the borrower’s household income of 20 percent or more for a period of at least six months,” Mortgagee Letter 2013-26 states.

Economic events include foreclosure, prior short sale, forbearance agreement, loan modification, deed-in-lieu and bankruptcy. If a “Back to Work” lender can verify and document a borrower’s loss of employment by evidencing a termination date or where a prior employer is no longer in business, the borrower may be eligible.

However, agencies are still looking for satisfactory credit even if the borrower is battling an economic event. The borrower’s credit history must be clear of late housing, installment debt payments, delinquency and any other derogatory credit issues. Credit scores below 500 are not allowed in the program, but borrowers with no credit score remain eligible.

If a Chapter 13 bankruptcy has not been discharged before the date on a loan application, the borrower must be granted written permission from the Bankruptcy Court to begin a new home loan.

For the first time, recovering families may apply for a new mortgage only 12 months after losing a home. The “Back to Work” program waives agencies’ traditional three-year waiting period after foreclosure, short sale and deed-in-lieu, as well as bankruptcy’s two-year waiting period.

After a few documents are settled, families are finding that the “Back to Work” program is proving itself a success. If you or a loved one is still without a place to call home, it’s not too late to find a lending agency that can help. The program ends September 30, 2016.