Distressed homeowners that made decisive action regarding their financial situations in the beginning of the foreclosure crisis are steadily working their way back into homeownership. Although I have assisted homeowners nationwide with their distressed real estate problems, the majority of transactions I have completed were short sales in Louisville. Over the last decade, I have had the pleasure of watching my clients recover from foreclosure and make it back into their own homes, some of them in less than 2 years.
One of the main messages I try to convey in my consultations with distressed homeowners is the importance of recognizing the severity of their current situation. Most of them have recently either lost a job, been laid off, or were released on a temporary furlough. Unemployment rates in Kentucky have steadily hovered above the national average ever since the recession began. Therefore, many of these individuals are not what one might classify as chronic non-payers on their mortgages or other outstanding debt payments.
Instead, these are individuals who have led responsible lives and, like many of us, could not predict such an extreme fluctuation in the job market. I try to keep that in mind during these home appointments. I am not there to lecture, profess, or stand on a soapbox; rather I am there to consult, counsel, and to protect their best interests. In most of these cases, I am trying to help them ensure a future that includes owning a home again.
I gained some inspiration for writing this post from an article on MSNBC about FHA rebounds in the mortgage industry. Many of the homeowners in Louisville have benefited from government-backed loans despite having a short sale on their credit reports. Included in the aforementioned article were figures listing the percentage of FHA-insured loans: in 2011, they accounted for 30 percent of loans for home purchases, compared with 4.5 percent in 2004. I'm not statistician, but I would say that this increase is extremely significant and perhaps indicative of projective numbers of loan products in the near future.
Although they have a higher interest rate than most conventional loans in 2012, the prerequisites for getting approved for an FHA loan are much friendlier to recently distressed homeowners. For example, applicants typically need a credit score of at least 720 and a significant down payment in order to qualify for a typical conventional mortgage. FHA borrowers typically need a credit score of 620 and a 3.5 percent down payment.
Processing short sales in Louisville often leads to repeat customers looking to buy a new home. As we provide short sale training to real estate agents nationwide, the results are no different. As we treat distressed homeowners with respect and truly work in their best interests, they will seek out your services and advice when they are ready to own a home again in the near future.
Short Sale Association of America