Five Options for Homeowners
Five Options for Homeowners who cannot make their mortgage payment:
*Deed In Lieu- A process where the Borrower signs a “Deed-in-lieu” of foreclosure AND the lender accepts it. This action simply grants the title to the property to the lien holder (your lender).
*Foreclosure- A legal process where the secured lender takes back the property though an instrument called the “Deed of Trust”. This process begins when the lien holder files a “Notice of Default” with the county recorder’s office and notifies the borrower.
*Loan Modification- A process where Borrower qualifies for a reduction in monthly mortgage payments by a reduction in the interest rate or a lengthening of the amortization schedule; or both. Lenders will not reduce the principle amount of the loan.
*Short Sale- A process where the Borrower qualifies with the lender(s) to accept a short payoff only after the property has secured a buyer to purchase the home at a fair market value.
*Short Re-finance- Borrower must be on time with payments; complete re-finance where the existing lender accepts a short payoff. The current market is not experiencing these types of re-finances.
Government backed home loans are the easiest most cost effective loans for first time home buyers. If you have not owned a home in the past two years, then you qualify as a first time home buyer for government backed loans. Currently these loans require 3.5% down payment and no minimum credit score. Here are the current guidelines for people who have had certain situations arise in the past regarding qualifying for homeownership:
Fannie Mae and Freddie Mac backed mortgage requirements for underwriting:
*Borrower has a past Foreclosure on credit report - 5 to 7 years before borrower can qualify, 680 FICO (credit) Score and 10% Minimum Down Payment
*Borrower has a past Deed-In-Lieu - 4 to 6 years before borrower can qualify, 680 FICO (credit) Score and 10% minimum Down Payment
*Borrower has a past Short Sale on credit report - 2 years before borrower can qualify, no minimum FICO (credit) Score and Will Qualify for ANY of Government Backed Mortgage Programs.
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