Many people ask how long they have to wait after having a foreclosure until they can be approved for a home loan. I have some good news for many of you!
VA loan: 2 years
FHA loan: 3 years
USDA loan: 3 years
Conventional loan: 7 years
The “gotcha” is that the date starts when the home is sold. It is NOT the date you received notice of default nor when the foreclosure started. If the bank took one year to sell the house, then that would push out the waiting period by one year, going by “date of sale” or when the lender got the property off their books.
I hope this information helps some renters to realize they don’t have to wait seven long years to buy a home after their foreclosure. Three years is a lot better, and VA, FHA, and USDA are all good loan options with good interest rates.
HOME. There’s just something about a place that you can call your own. It may not be big or super fancy. It might not have granite countertops and hardwoods throughout. The kitchen might be a little dated, and maybe the front door could use a facelift. But darn it — it’s HOME and it’s YOURS!
Because it’s yours, you have time to make improvements as funds become available. In the meantime, you are acquiring equity, growing your personal wealth in real estate.
So go ahead, pick out some paint and make it uniquely yours. According to decorating magazines, gray is the new “in” color. Some people mix it with beige for what they’re calling “griege.” Not your thing? How about an accent wall in a color called garbanzo? Heck, if 1950s turquoise is more to your liking, have at it, because the house is YOURS and you can color it any way you like.
When you pull weeds or mow the lawn, it’s not a chore anymore. It’s pride of ownership. Come to think of it, you might even plant some azaleas or roses or a row of delphinium to attract the butterflies.
If you’re in a condo and don’t have much space, you might steal an idea from Good Housekeeping and install an herb garden on an old pallet you picked up for free. It might not be the Butchart Gardens, but it’s YOURS and it’s fun, and it brings you joy.
Sometimes, the simplest things can bring pizazz to a home. Like one time I found these unique light switch covers that I thought were so pretty, so I bought a bunch of them and installed them in my house. In the months and years that followed, you would not believe how many compliments I got on those little pieces of art. It wasn’t a big thing, but it made me happy.
Now, there are more creative light switches than ever. How much fun is this geeky home accessory made by a company called “Power-Up”? It’s a mini classic arcade joystick, complete with sound effects. When you own the home, it’s worth the effort to make it special.
Maybe what you can afford right now is no bigger than a small cottage. That’s okay. No one ever said your house has to be a mansion. Besides it’s less space to clean and the heating bill is more reasonable.
Do you work in the city? Consider a condominium where you can walk to practically anyplace you want to go. It’s not a bad lifestyle for the busy professional who doesn’t have the time or inclination to take care of a yard.
Over the years, I’ve rented and I’ve lived in various style homes that were mine. And I have to tell you, there is something about knowing that the place where you brew your coffee in the morning and sit down to relax at the end of a long work day is YOURS.
It may not be perfect, but hey, it’s YOUR HOME. And that’s what’s most important.
Most people say they want to own their own home someday. You might be surprised to know that “someday” is now. Perfect credit not required. Only 3% down for first-time buyers. If you’re in California or Washington, you can connect with me here. I’d love to help you.
Thank you for stopping by. And thank you for sharing this on social media to inspire more renters to become home owners, because pride of ownership is good for America.
As a mortgage loan officer, I wish no one used debit cards. A debit card is the enemy of a home buyer. I’ll give you two good reasons why.
Debit Cards Expose Your Private Life
- Do you value your privacy? If you’ve been using a debit card, you have just shot your privacy all to pieces.
When you apply for a home loan, lenders require two months’ bank statements to verify assets. People who use a credit card for their purchases have short bank statements: one page, maybe two. There are the deposits and only a few withdrawals. All their purchases for the month are covered by one payment (or two) to a Visa or MasterCard. What did they purchase? No one knows and no one cares. No one is passing personal judgment.
Reviewing the statements is quick and easy. They are living within their means. Their balance is stable or growing. No overdrafts, no bounced checks. Everyone is happy.
On the other hand, people who use debit display every single purchase. We see how many times they bought a Netflix movie, how many lattes they drank, when they gambled at the casino, how often they did the fast food drive-through, where they shop for clothes, where they buy their underwear, on and on and on for eight, nine, ten pages. There is no privacy whatsoever. Reviewing all that is tedious and time-consuming. If they had used one Visa card, they would have retained their privacy and saved me and the underwriter some good time.
Debit Cards Don’t Help Your Credit Score
When your use your credit card responsibly (keep a low balance and pay in full each month), your credit score gains points. With a debit card, you get zero points, zero influence on your credit score.
If you’re a young person or recent immigrant and you’ve used only debit, you will have a blank credit report and no score. How will you qualify for a mortgage to buy a house with no history of using money responsibly? If a lender is going to give you several hundred thousand dollars, they first want to see that you can handle credit properly.
Too Many People Using Debit when they should be using credit. Please help get the word out by sharing this on social media, because most young adults do not realize these facts. Thank you!
If you have a tax lien or civil judgment that does not contain the proper and correct identifiers, then Equifax, Experian, and TransUnion will remove it from your credit report this month, beginning July 10th. The identifiers are name, address, and either social security number or date of birth.
There is no need to send a letter requesting the deletions. If your lien or judgment does not include the identifiers, the account will be removed. It doesn’t matter if it is paid or has a balance. This is about proper identification, not about money owed. The expectation is that about 50% to 60% of tax liens will be deleted, and about 95% of civil judgments will be deleted.
If you are fortunate to have one of these derogatory accounts removed, you should see your credit score go up. This, in turn, could qualify you for a better interest rate or a better loan program when borrowing money or getting a mortgage.
How Much Will Your Credit Score Increase?
How many credit points you might gain depends on the rest of your credit report. If you have a clean report with one lien that gets removed, you could see an improvement of 40 to 50 points, which would make a significant difference. On the other hand, if your report is scattered with late payments and collections, your score will probably increase by only 10 points or so.
Getting the Credit Deletion Does Not Mean You Don’t Still Owe Money
Let’s say you hired a contractor to replace your roof, then due to hardship, you did not pay. The contractor then filed a civil judgment that went on your credit report. This judgment contains your name and address, but is missing your social security number and date of birth. This judgment will be removed from your credit report, but that doesn’t mean you don’t still owe the contractor for the work he performed. This is not a license to steal from the contractor. What’s more, the next time a title report is pulled, this lien is going to show up, so when you sell the home or refinance, this lien must be paid.
If you owe on back taxes, you can expect that to stick like glue to your social security number, even if it gets removed from your report for not having your address.
Checking On Your Credit
To find out if your lien or judgment was removed, order your free annual credit report by mail from http://www.annualcreditreport.com. Don’t be lazy and order online for the many, important reasons stated in Repair Your Credit Like the Pros. Or, you can call 877-322-8228.
Please share this information via social media, because it affects a lot of people. Thank you.
It sounded good to so many people. They thought they’d receive a great return on their investment. That’s what the former owner of the “We Buy Ugly Houses” franchise — Karen McClaflin, age 58 — wanted them to believe. But this week in court, she admitted to misleading investors, misusing their money, and even forging signatures on Deeds.
Turns out she was running a real estate Ponzi scheme with fraudulent activity going all the way back to the boom year of 2005. I recall hearing about it as a “clever and effective advertising strategy” at a conference for mortgage and real estate professionals.
McClaflin and a partner opened a franchise of “We Buy Ugly Houses” and called it Trademark Properties and Trademark Realty in Colorado Springs. In 2011, when they ran up excessive debt, the partner bailed out and declared bankruptcy. McClaflin, however, wanted to continue to milk the cash cow. She opened a new “fix and flip” business called Homesource Partners, transferring the former investors to this new business.
She told her investors that some of the houses were too ugly for banks to lend on, and besides, the banks took too long. She claimed she was purchasing these eye sores at a great value and in only 31 to 90 days, the homes would be rented or resold at a handsome profit.
But alas, it was too good to be true. This smooth-talking shark knowingly and intentionally misused money by signing multiple investors to the same property, chose not to record all of the Deeds, sometimes didn’t tell investors when “their” property sold, and even forged signatures.
In the end, she used new investors’ money to pay older investors: the definition of a Ponzi scheme.
Karen McClaflin is scheduled to be sentenced on January 17, 2018.
For complete story, see U.S. Dept of Justice page here.
The credit bureaus (also called credit reporting agencies or CRAs) have adopted a new policy: tax liens and judgments will be removed from credit reports if they do not include the proper information identifying them to the individual.
It is estimated that 60% of tax lien information will be removed from credit reports and ALL civil judgment records will be removed!
A release from TransUnion gives some insight about what to expect:
- Based on feedback, most Bankruptcy information will meet the minimum reporting requirements, so don’t expect those to go away.
- The new standards will apply to both new and existing public record data.
- Minimum identifier data required: Name, Address, Social Security # and/or Date of Birth
- Minimum frequency courthouse visits to obtain newly filed data: 90 Days
When it will roll out: During the week of July 10, 2017, the CRAs will remove from their databases previously collected public record data that does not meet the enhanced standards.
Please pass on/share this news, because it will give a lot of folks new hope that they are not forever stuck in bad credit.
Many thanks to Credit Repair Resources, Inc. for this information. firstname.lastname@example.org
Real life scenario. Which loan would you choose?
A young married couple was buying their first home. They compared two offers. One from a credit union they were members of; the other from a full service mortgage company where they knew the loan officer to be honest and ethical.
Both loans had the same interest rate.
The credit union had two lender fees = $96
The full service mortgage lender had one flat lender fee = $1,395
Title, escrow, recording, property taxes, insurance would be the same with either lender.
After one week, the credit union had not yet responded to their online application or phone messages.
The full service mortgage lender responded with a phone call within the hour and followed up with an email the next day.
Which of these lenders would you choose?
The young couple chose the credit union. As the wife said, “We were both members before we were married, and we love our credit union.” They also wanted to save money on the lender fee.
It took several more weeks of making more phone calls leaving messages to get the credit union to respond. By the time an application-taker got back to them, the interest rate they saw online had gone up. Nevertheless, they proceeded.
Six months and ten days later, the loan finally closed. In the meantime, interest rates had gone up even more. They had to pay five more months’ rent than they would have with a 30-day closing.
If they had locked with the full service mortgage lender, they would be making a smaller monthly payment every month for the life of the loan, and that would have quickly made up for the higher lender fee.
What’s more, they would not have gone through the extra stress and anxiety. In the end, the wife said to me, “We hate the credit union!”
There’s More to the Story!
But it gets worse. Shortly after closing, the credit union sold their loan to a national mortgage company that they dislike and don’t want to do business with. So they didn’t end up getting their beloved credit union as their loan servicer anyway.
I have a friend who is a waiter at Ruth’s Chris Steak House. He says, “If you want a great steak, go to a steak house. That’s our specialty.” In agreement with this principle, I say, “If you want a great mortgage loan, go to a full service mortgage company, not to a lender that specializes in checking and savings accounts, car loans, boat loans, signature loans, and throws in some mortgages to the mix.”
Thank you for reading my blog. I welcome your comments (top of the column to comment) and appreciate your social media shares.
If you would like to become a home owner but know (or fear) that your credit will not qualify, here are some facts about getting an Federal Housing Admin (FHA) loan:
- Perfect credit is not required, but lenders prefer to see that you have been paying creditors on time for the past 12 months. That shows you have put difficulties of the past behind you and are now on track with your finances.
- You can get approved 24 months after a Chapter 7 bankruptcy is discharged.
- Medical collections can be ignored, because they are too often the fault of the insurance companies.
- Other collections, up to a total of $2,000, can be ignored.
- The down payment is 3.5 percent of the purchase price. If you don’t have the cash but have family who is willing to help with either a gift or a loan, that is allowed.
- Closing costs may be paid by you, by a family gift, or by the seller. Or, the lender can credit you toward closing costs in exchange for a higher interest rate.
- Most lenders require that your middle credit score is 580 or 600, depending on how strict they are.
Where Do You Get a FHA Loan?
You get a FHA loan through a mortgage lender. I recommend going to a full-service mortgage lender, because they have more options than a bank or credit union, often close faster, and because I work for a full-service mortgage lender and think they are the best!
What If Your Credit Doesn’t Qualify?
If your credit score is too low or if you have credit blemishes that need to be repaired, may I suggest a handy do-it-yourself guide that won’t cost you an arm-and-a-leg? Credit repair is legal and good folks are doing it and becoming home owners. For example, I am closing a loan for a lovely couple who got tired of paying high rent and will now own a three-bedroom home that includes a big garage with a workout room and half bath — with a smaller monthly payment than their rent. To check out the credit guide, click here.
Thank you for reading my blog. Please feel free to subscribe (see top right) and pass this info along via social media, because a lot of people think their credit is not good enough to buy a home when it is! Perfect credit is not required for home ownership!
You have the legal right to see the price of a mortgage before providing any personal information or having your credit report pulled. Some shady loan officers are trying to get people to commit to them before providing a cost estimate — and that is ILLEGAL.
Recently, I heard from two different book readers in two different states about loan officers who tried pulling tricks. I share their stories with you so that you won’t fall prey.
Loan Officer Asks For Money Upfront — Illegal!
When the home buyer asked for a cost estimate (the Good Faith Estimate has been retired), the loan officer pressured her for her credit card information. He refused to take any of her criteria (loan amount desired, etc.) or let her make an application until she paid for an appraisal report with her credit card. “I want a commitment from you first,” he said.
This is illegal, and the home buyer is filing a complaint with the Consumer Finance Protection Bureau against this large national direct lender.
Loan Officer Sidesteps Questions with the Runaround
Another home buyer had a different kind of trouble when she asked for an upfront estimate.
The loan officer said, “How can I give you an estimate when we don’t have a specific house, specific loan amount, and I don’t know which lender I am going to choose?”
The home buyer then asked what the lender fees would be.
“I don’t know, because I don’t know which lender I will broker out to,” she (dishonestly) replied.
This unprofessional individual was recommended by the real estate agent. Here’s a valuable tip: do not choose your mortgage advocate by who the agent is friends with. You make your own choice.
First, the loan officer should give an estimate for the maximum home price the buyer may want. No address is needed at this point.
Second, the loan officer knows the lender fees and should provide the figures when asked.
What You Can Do
If you encounter this type of nonsense, walk away. Don’t reward a dishonest shark with your business. Loan officers are paid on commission, so when you walk away, it makes a big impact. There are plenty of good, ethical mortgage professionals who are state licensed and trustworthy.
You can also file a complaint with the CFPB. I would not advise filing against someone who gives you the runaround, but if a loan officer asks for any type of payment (including collecting your credit card info) before providing you with complete disclosures, that is a violation of federal lending law — and therefore, that person and the company they work for should face consequences.
No More Good Faith Estimate
The GFE has been replaced with a different form: Cost Estimate, Fees Worksheet, Cost Worksheet, whatever they want to call it. Ask for a Cost Estimate and an ethical, honest loan officer will provide you with the information you need on the form their company uses. We don’t care what title they put at the top of the page: the information you need about the loan is there. (Do not ask for the Loan Estimate. That comes later with your disclosure package after you have a purchase contract.)
No one would think of putting money down on a car without first seeing the price tag. The same applies to a mortgage. You have the right to see the terms of the loan before making a commitment.
If you would like my help, I am state licensed (NMLS 1284134) in California and Washington.
FHA has rolled out a new option for home buyers who need help obtaining a down payment. Now, for the first time, a family member can loan you the money. Previously, all funds coming from family had to be a gift with no payback required. Not all families are in a position to give funds, but some could make a loan, so this is good news.
What You Need to Know
The loan must be disclosed right up front on the loan application, but don’t worry about the paperwork. Simply tell your loan officer and he/she will input it properly for you.
The loan is recorded with the County Recorder’s Office, just as any official house loan would be. Your closing agent (escrow company or closing attorney, depending on your state) can guide you.
The down payment on an FHA (Federal Housing Administration) loan is 3.5 percent of the purchase price. On a $200,000 house, that would be $7,000 down payment.
The house or condo must be your primary residence. You cannot use an FHA loan for a vacation/second home nor for a rental property.
You do not need to be a first-time home buyer. Second time buying a home, third time, it doesn’t matter.
Don’t Forget Closing Costs
In addition to the down payment, there are closing costs. Such as, lender fees, credit report, appraisal report, title insurance, escrow/settlement fee, and prepaid costs (property taxes, home owner’s insurance, prepaid interest). You can pay these or the seller can pay the closing costs, if it is designated on your purchase contract. Or, the lender can give you a credit toward closing costs in exchange for a higher interest rate.
Credit Score Required For an FHA Loan
Each lender has its own rules for the credit score required for an FHA loan. Typically, that ranges from 580 to 600 as the minimum. If you can boost your score to at least 620, you will get a better interest rate and lower monthly payment.
A Chapter 7 bankruptcy must be discharged for 24 months. A Chapter 13 bankruptcy must have been paid on time, per the arrangements made by the court.
FHA likes to see on-time payments for the past 12 months. If you’re going to be a home owner, you should be able to demonstrate that you’ve been on-track with your finances for one year. That’s reasonable.
Thank you for reading my blog. Subscribe if you want the weekly posts to come to your email.