Applications for U.S. loans have increased this week as a result of continually decreasing interest rates. According to the Mortgage Composite Index, which measures the quantity of mortgage applications, has recently increased by 6.4% on a seasonally adjusted basis from one week earlier. For those seeking a mortgage after a foreclosure or short sale, this is an excellent time to consider another home purchase.
Average contract interest rates on 5/1 ARM’s, a typical option provided by portfolio lenders, are the lowest they have been since June this year. Portfolio lenders, which do not place a time frame on the wait period, are lending mortgages at a current APR in the 4.5% to 5.5% range. For those who are looking to put more on a down payment, financing with a portfolio lender is a great strategy to return to home ownership after a foreclosure or short sale.
A new home purchase can also be obtained 12 months after a foreclosure or short sale with the FHA’s “Back to Work” Program. To qualify for the “Back to Work” Program after a foreclosure or short sale, an applicant must clearly demonstrate an “economic hardship”. Economic hardship is defined by a loss of income, 20% or more over a 6 months period or longer. According to the Mortgage Composite Index, the average contract interest rates on 30 year fixed mortgages backed by the FHA have also decreased to the lowest levels since this summer. APR for the 12 month FHA program and the standard FHA loan (with 36 month waiting period) is currently in the mid 3%-mid 4% range.
With VA eligibility, you can purchase 24 months after a foreclosure or short sale with current APR around 4.5%. Veterans looking to purchase a new home after a foreclosure or short sale should take advantage of these excellent interest rates in addition to 0% down payment.
Fannie Mae and Freddie Mac will lend for home purchase 24 months after a short sale with 20% down payment. APR for these loans is currently around 4.25%.
For those who have had a credit event, now is an excellent opportunity to finance a new home purchase or refinance an existing purchase after a foreclosure or short sale.
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