In light of recent economic years, many people have experienced adverse events in their lives- short sales, bankruptcy, foreclosure…
This post describes typical waiting periods to be able to qualify for a loan again: http://bluepicketrealestate.com/can-i-buy-a-home-again-after-a-short-sale-foreclosure-or-bankruptcy/
But, researching a bit further and getting creative, there are a few other options out there (although definitely not as desirable as a traditional 30 year fixed home loan).
Cove Financial has a program that is set up like a lease option. The Mortgage Alternative Program sounds simple… “Start the path to your dream home with as little as 5% deposit…” If you are still house shopping contact Sarah Williams Real Estate for help.
I spoke with a representative from the company to dig a little deeper into the process.
You apply for the program much like a traditional mortgage- providing tax records, bank statements, credit report, etc…
Cove Financial purchases the house
You would need to put 8-13% down
3% of that is a non-refundable fee that does not ever come back to you, even if you buy the house.
The other 5-10% does get credited back to you when you buy.
Then you rent from them for up to 6 years…
Here are the kickers that aren’t obvious on their website-
1. Rent payments are not typical rent amounts, they are higher- an example I got on a $400,000 house had rent at about $3100/mo (there are 6 different options- all at high than normal rent)
2. The amount you contract on the house for is not the price you will pay on down the road when you are ready to buy… rather than a portion of your rent getting credited to your purchase price, you get to pay more for the house each year you are in it… this price depends on the rental payment option you choose… on a $400,000 house, the best scenario with 10% down is that you pay $406,000 later for the house. Worst case scenario with the 5% down program could put you paying as much as $478,000 if you want a little lower monthly rent and wait 6 years to complete the purchase… OUCH!
This program has its advantages and can help many people- but, make sure that you are in a position to complete the purchase within the 6 year timeframe and evaluate the payment options to find the one that best serves your situation- especially in regards to the price in the year you would be able to buy.
Other alternatives would be to look into a portfolio loan with a local lender. Portfolio loans are based more on common sense lending… they will still be heavily scrutinized, but it is possible to obtain a mortgage more quickly after bankruptcy or foreclosure with extenuating circumstances. Typically you would need a large amount of money down and would be looking at a higher interest rate. Here is one rate schedule I was able to locate:
While the alternatives to waiting to qualify for a traditional mortgage may not be at the best interest rate or terms, we understand it might make sense in some situations to go forward…
We are happy to help you explore options- give us a call 719-357-7653