Cheat Sheet Q&A
Today’s topic: Buying a home after a foreclosure
I listen to you guys and the news on my way to work each morning…
I hear lots of stories about how the real estate market is going as well as mortgage interest rates etc…
What I have not heard and I am trying to find out is:
Who is writing mortgages to people who have gone through foreclosure?
What is the time frame for being able to purchase a home again after foreclosure?
My wife and I had gone through a 5 year foreclosure defense only to settle on giving up due to jeopardizing losing monetary assets if we went to court and lost.
We were able to walk away clean without having to pay any legal fees and no deficiency.
Now 2 years later, my wife and I are beginning to look for another home due to increasing rents… We recently checked our credit and I am at 600 my wife is at 650.
I have a good job with decent income and we have about $45K to use part or all for a down payment.
(They checked with their bank and were) told us we need to wait 3 years and have at least 25% down.
We will be checking other lenders to see if their criteria are any different…
Bottom Line: First it’s true that virtually all banks adhere to the following timelines before potentially being eligible for a mortgage when you’ve been through a distressed property event:
- 2 years for a short sale
- 3 years for a foreclosure
The reason the standard is rather universal is that those are Fannie Mae & Freddie Mac standards and thus won’t back the mortgage if those timelines aren’t honored. That being said there is another potential route for you. I covered this on April 15th (I’ll forgive you for not listening for all four hours that day – but just once…)
It’s called the FHA “Back to work Program”. Its enables:
- A previous homeowner who lost a home to foreclosure, short sale or a deed in lieu to purchase a property again after just 12 months
To be eligible for the program:
- You need to show a loss of income of at least 20% for six consecutive months leading up to the distressed property event
- You need to show a solid credit history before the event and since you got back on your feet
- You need to have a credit score of at least 640 or have gone through a HUD authorized counseling program
This is perfect for the person who lost a job or significant income in their existing job due to no fault of their own. So FHA and specifically this program may represent the best opportunity for you to return to homeownership without waiting for another year. I do have a couple recommendations on local brokers who can assist in your effort to obtain FHA financing (that I’ll provide directly).
Why it's always time to manage your credit score:
Bottom Line: A recent study from Credit.com found the following:
- 16% have never checked their credit score
- 40% haven’t check at least one credit score within the last year
- 54% have only check one number once
So why does this really matter? We tend to only be credit score conscience when we’re getting ready to apply for a loan. It’s easy to forget that our credit score affects the cost of life in other ways all of the time (insurance rates, deposits for anything that require them, a job, etc.). It’s also often too late to make a meaningful difference in your credit score if you only find out in the process of taking out financing.
I recently shared data showing that even if you obtain financing with poor credit the average increase in cost vs. those with excellent credit is about 40%. So staying on top of your credit score all of the time and doing what you can to manage it well will constantly set you up for success and a more affordable life.
Update - how much traffic tickets are driving up auto insurance:
Bottom Line: Not too long ago I shared research from InsuranceQuotes.com with you regarding the cost of insurance premiums related to traffic citations. Here’s some updated information:
- Florida actually has the lowest increase in auto insurance premiums on average from a DUI but it’s still an average of a 55% increase
Even small citations can cost you big money:
- Speeding tickets under 15 mph cost an average of 21% more upon renewal
- Speeding tickets over 15 mph average and increase of 28%
So it remains evident that if you receive a traffic citation, the cost of the ticket itself is little more than a down payment on a much bigger and longer term increase in costs. Even for the smallest citations.
Should you take out insurance plans for your mobile devices?
Bottom Line: Should I start with a no and go from there? Ok so it’s not as though it’s the worst insurance policy you could take out so I’ll go through some info on mobile insurance need.
According to data from Verizon users:
- 25% of mobile users have damage that could be claim worthy per year
That being said… Even if you are part of the 25%, that doesn’t mean that the insurance is a good value even then. The insurance cost generally runs $7-$10 per month depending upon your device and service provider and they all include deductibles which range from $50-$125 as well.
For most people that’s not going to be a good value that’s worth it. For that matter with people commonly changing out of mobile devices every two years, there is never a likely hood that you’ll have a need on a given device you own. Keep in mind that insurance companies make good money for a reason. They simply take in more money (and get to invest your money and reap the benefits) than they pay out. Some insurance products are needed. Many are not. This is one that generally is the later (unless you’re really accident prone).
Bottom Line: We have a new first in mobile market share. Apple now rules all of North America. According to the latest market share numbers for mobile usage in April (from Chitika Insights):
- 53.1% of all mobile traffic in North America was on an Apple device
- 44.5% was on an Android device
And no one else mattered. Well that’s mostly the case. To see just how dramatic the Apple and Google domination is the #3 player has 1%. Literally:
- 1% of mobile traffic was on a Windows mobile platform
- 0.8% was on a Blackberry OS
- 0.6% - everything else
With a strong fall lineup of products due from Apple it could truly be a move in mobile that could position iOS in mobile with the 70% type of market share that Google enjoys in search.