Qualifying for a Home Mortgage Without Losing Sleep

by Belinda C. in Detroit, Michigan and by Erica in Garden City, Michigan

Ask Kate about qualifying for a home mortgage without losing sleep: One of the most stressful situations in life, the anticipation of the mortgage process has kept more than one prospective homeowner up at night. But even more so if someone has lost a home to foreclosure in the past. Meet Belinda! Or perhaps has just returned to working full-time. Meet Erica!


Q 1: How do I buy a home again after I've had my home taken from me?

By Belinda C. in Detroit, Michigan

Kate, How do you become a home owner again after you have had your home taken from you in a fraudulent foreclosure by the banks? I would like to know because my family and children are still suffering from this right now.

It's very difficult to pick up the pieces of your life when you've had your home taken from you.

Knowing that the banks and the Office of the Comptroller of Currency are not handling procedures in the right way is very distressing. We might not get that much back in the National Mortgage Settlement.

So how do you become a home owner again when it wasn't your fault your credit is now messed up and you have a bankruptcy hanging over your head from this foreclosure? What can you do?

Yes, they have programs set up for people who may be heading into foreclosure or programs for people so they won't end up in foreclosure but very little help for people who want to become homeowners again they want your credit to be at least 620.

***zz-portrait-left.shtml*** Ask Kate answers: How do you buy a home again after you have had your home taken from you?

Hi Belinda,

One of the more forgiving home loan programs is found in FHA financing. True, the FHA home loan approval process can be a bit finicky in regards to the property but not as much when it comes to credit.

So where do you start? The first step is to ask your trusted friends, relatives, and co-workers for the names of their Realtors. Get 3 referrals and set up a time to talk with the real estate agents. See which ones put you at ease. This is important because you'll be spending many hours together in the coming months.

Next, wash and repeat the process for mortgage originator referrals. But add one step! Ask the Realtors you've interviewed where they'd send their mothers or daughters for home loans.

Request the specific name, not only of the company, but also the individual mortgage originator who's been successful at getting people qualified after foreclosure using FHA financing.

Next step, work on rebuilding your credit. Go here for more details: How to Fix Your Credit Score and Keep It Strong and Fixing Bad Credit to Improve Your Life.

You have my sympathies for your past experience in homeownership. In fact, the current environment makes me deeply sad for struggling homeowners across the United States. It just isn't right! (A massive understatement.) I do hope you will continue to work at owning a home again if this is important to you and your family.

Best wishes,


Q 2: Do I stand a chance of qualifying for a mortgage?

By Erica in Garden City, Michigan

Kate, I have been employed for 20 years at the same restaurant, the last couple of years I have been off the books though, just working part-time on and off. But I am back working full time and getting ready to go back on the books.

My question is do I stand a chance of qualifying for a mortgage? If not where should I start?

I have good credit and carry a car loan and payments are always on time.
***zz-portrait-left.shtml*** Ask Kate answers: Do I stand a chance of qualifying for a mortgage?

Hi Erica,

This is a tricky one, returning from part-time work to full-time.

It's a valid concern of the person approving the home loan to wonder if you've only temporarily switched to a 40 hour week for qualification purposes.

They are bound to question if you returned to part-time after buying the house if you could still afford the mortgage payment.

Technically, the underwriter should average your last 24 months of income to use in qualifying ratios. But explaining your circumstances in a letter of explanation (LOE) can go a long ways in making an underwriter feel comfortable enough to approve your mortgage application. So explain why you've been working fewer hours and the cause for returning to full-time employment.

I'm happy to hear that you have established credit. This also will be a major contribution to the tricky loan approval.

In addition to the steps I gave Belinda above, I strongly encourage you to learn about Good Faith Estimates so you can spot a good deal on mortgage rates and closing costs.

Lastly, follow my mortgage blog for helpful tips you won't find anywhere else!

But warning! I hear from homeowners across America that reading my mortgage blog is addictive. Of course, this is music to my ears because I'm on a mission to bring help to struggling homeowners and show home buyers how to prepare for successful homeownership.

Best wishes,


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FHA Financing After Bankruptcy and Foreclosure
by: Kathleen

We are looking to purchase a house soon and wonder if we would be eligible for a mortgage due to bankruptcy discharge in March 2010? This included our mortgage.

Is this also considered our foreclosure date since the mortgage was discharged as well? I appreciate any help you can give me.
Thanks, Kathleen

Hi Kathleen, Kate here...

Depending on your state's foreclosure laws, it can take up to a year for the title to transfer out of your name after your BK is discharged. In some states this is called reconveyance of title.

You could call you local title company and ask if they could help you determine the specific date your foreclosure was finalized. They may do this at no charge. Ask for sure!

Then once you know the date, contact a lender to be preapproved for Federal Housing Administration (FHA) financing.

Why the FHA home loan? On January 30, 2013, HUD stated that a borrower is eligible for FHA financing 3 years after a foreclosure, assuming they meet FHA guidelines including re-establishing good credit.

Ask for other mortgage options also.

Best wishes, Kate

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