Posts Tagged “FHA 203b”

Chapter 13 Bankruptcy FHA Home Purchase TheZerodownloan.comit’s a little known fact amongst Homebuyers, Renters, Realtors and even Loan Officers that both FHA and VA allow a Borrower to purchase a home after they’ve made 12 timely payments on a Chapter 13 BK.
Wait! What? Yes you read that right.
Why is this important? It’s important because while grappling with many unpaid collections, charge off’s and judgements, a Borrower’s credit score remains low and unable to revive. This keeps them from FHA financing.
Bringing all that unpaid debt, all the dirty laundry so to speak, under the governance of the Bankruptcy Trustee forces the credit bureaus to begin reporting each of those negative accounts as “INCLUDED IN BANKRUPTCY”.
The magic is this: When a trade/account is reported in this way, the FICO (Credit) Scoring model treats the accounts as “non-rated”.
Their negative effect is diminished!
Now a smart homebuyer would couple this with obtaining maybe 2 or 3 **secured** credit cards which are virtually guaranteed, pay on them for 12 months alongside the Bankruptcy Trustee payments and . . . voila! After 12 months of filing Chapter 13 the Borrower has a better score *AND* some re-established credit.
It’s important if using this maneuver to not leave any unpaid collection/charge off outside the BK filing.
For more details on purchasing a home while in Chapter 13 Bankruptcy, contact us at 877-332-9703 or through the links on this blog site.

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HUD homes are those being sold by HUD.
If such homes are indicated as “IE” this means that the FHA loan on it (203b) can be insured by HUD with Escrow Repairs. So “IE” means “Insured With Escrow Repairs”.
Only repairs below a total of $5,000 can qualify for this type of FHA financing and meet minimum property standards required for an FHA mortgage.
The “repair escrow” that’s set up will be done in coordination with the FHA Lender and the work has to be completed within 90 days. The amount of money to be deposited into that “escrow” is determined based on Contractor ‘bids’ and has to be funded at the same time the FHA 203b Purchase money mortgage loan is funded.

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Someone asked me the other day if a Reverse Mortgage could be done on a property that had recently been acquired by the Seller (less than 90 days ago) Unfortunately for Reverse Mortgages (also known as HECM , i..e Home Equity Conversion Mortgage ) HUD doesn’t allow property flips.

Below is an additional FHA related flip rule :
If a property is being financed with the standard FHA loan (203b) and the resale occurs between 91 and 180 days where the new sales price exceeds the previous sale price by 100% or more, FHA will require additional documentation to validate the new value of the property. This often involves at least a 2nd appraisal, but also possible proof of repairs and remodeling work to the property.

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