Buying a Home in Long Beach with an FHA Loan after a Foreclosure? Current FHA guidelines do not penalize a borrower with past credit hardships like bankruptcy, short sale or foreclosure. However, there are certain things that underwriters are looking at to determine that the hardship is unlikely to happen again.
Determine that it will not happen again: You may be asked to provide a Letter of Explanation (LOE) to describe the circumstances around the hardship. Your loan approval does not hinge on this letter, it’s just so the underwriter has an idea about what happened. They do not want this to be a repeat occurrence.
Re-establish good credit: DU, the automated underwriting system, considers the last 12 months. Make sure you have a minimum of 3 credit lines, at least 1 revolving credit line (credit card). Once you’ve established credit, maintain it by not making payments more than 30 days past the due date.
Income / Employment: Documenting income and establishing consistency and dependability of employment is the most important factor in qualifying for a home loan. We need two years of stable employment or just graduated and have a job in that field, i.e. nurse.
Qualifying After Foreclosure Getting Harder?
As of the writing of this article, there is no difference between applying for a FHA loan if you have a past hardship, and applying for a FHA loan if you have not.
Call me if you have any questions about Buying a Home in Long Beach with an FHA Loan after a Foreclosure. Remember, It is a good idea to get qualified now even if you may not buy for a year. Qualifying now gives you a chance to fix any problems that may stop you from buying that great home in Long Beach or Lakewood.
Allison Van Wig, 562-882-1581, www.SuperBroker.com