How do I apply for the SHBA Program, and what would disqualify me?
Simply print our application form and add in all of your information and fax it back to us to get the ball rolling. What SHBA is trying to determine is whether you would be able to purchase one of our homes in the program in 24 months or less with our help. About 80% of applications are accepted and the most common reason for an application to be declined is a foreclosure within the last 12 months.
Does SHBA conduct business through seminars?
No. We don’t conduct business through seminars, your meeting is one on one with a local representative. Although there are some legitimate companies that use seminar-stylee meetings, many companies use hotel conference facilities and then leave town after the weekend never to be seen again.
Can I buy a home if I’m on a fixed income?
If you bring in enough money to pay rent then you could be making a house payment. If you are still concerned about having a low qualifying amount you may want to apply with another person such as a friend or family member so that your incomes can be combined allowing you to purchase more of a home. Although it is not a requirement you and another person could purchase a two-flat or duplex.
I am self-employed. Can you help me purchase a home?
Being self-employed does not prevent you from purchasing a home. Most conforming loan programs (FHA, Fannie Mae or Freddie Mac) will require that you have 2-1/2 to 3 years of experience and can document your income with tax returns or through bank statements. If you are interested in the second option then it is important that you deposit all business revenue so you can document your cash flow.
Are there any homes that I cannot purchase?
Yes, there are certain homes that cannot be purchased through the SHBA program and most are listed below.
Build Job – To build your own home you need a construction loan which generally requires perfect credit and a large down payment. New homes which are already built can be purchased in the SHBA program.
Mobile Homes – Most mobile homes have a car title and many lending programs either will not finance them or place so many restrictions as to make it impossible.
Pre-Foreclosures – A property is pre-foreclosure if it hasn’t been through the judicial process or auction. To purchase a property at the auction you must be able to pay the entire balance within a few days which is impossible using a mortgage loan. If the property is not purchased at auction then it goes back to the bank as an REO which can be purchased in the SHBA program.
When can I begin looking for a home?
Once your file has been reviewed by the lender you can begin looking for homes. This process is usually completed in the first 3-6 weeks of the program. It is necessary that your file be reviewed by the lender because we must know when you can purchase, how much you can purchase, and what must be resolved so will be eligible for financing at or before the end of your lease. To look for a home without knowing the above information is very risky and could result in you losing the home.
How long does the program take to complete?
The SHBA program generally takes from 6 to 24 months before you will be able to purchase your home. During this period SHBA will be working with you and you have the option of renting the home that you will purchase.
If I cannot purchase right away what are my housing options?
If the lender determines that you cannot purchase a home immediately then you have the following housing options:
Leasing with the Option to Purchase – This option allows you to live in a home as a renter and then purchase it once we have completed the steps for financing as outlined by the lender. At the time you purchase SHBA covers your administrative closing costs.
Leasing with No Option to Purchase – This option allows you to continue renting your current dwelling or rent any other dwelling available. When we have completed the steps for financing as outlined by the lender you will be referred by SHBA to an approved real estate agent who will help you find a home. At the time you purchase SHBA covers your administrative closing costs.
I am thinking about using a debt management program, will this help me purchase a home?
A Debt Management Program (DMP) is a company that offers to get creditors off of your back and lowers the interest rates on your credit cards. They collect a payment from you each time you are paid and then distribute that money to your creditors monthly. For the purposes of purchasing a home, you may want to consider alternatives to a DMP. First, for the purposes of purchasing a home, a DMP is treated exactly the same as if you had filed a Chapter 13 Bankruptcy, however you get none of the benefits of bankruptcy. That is you would have to participate in the DMP for a minimum of 12-months and have made all your payments in a timely manner before you could purchase a home (same as Chapter 13 Bankruptcy) but you will not get the breaks and protections afforded those in bankruptcy such as setoffs, discounts, and complete discharge of certain debts. Finally, most DMP’s work only with a credit card and other consumer credit debts and usually will not help you with broken leases, utility bills, medical bills, judgments, tax liens etc. The end result of working with a DMP is that you have only paid off some of your debts and often you are no closer to purchasing a home.
How does SHBA help people with credit challenges?
The SHBA program is a perfect fit for folks with credit challenges for three reasons. First, and most importantly, we figure out exactly what has to be resolved for you to obtain your loan. To accomplish this we have a national lender pre-underwrite your file. That is, people who do home loans for a living tell us what has to be resolved for you to get a loan. This is extremely important because often times you do not have to resolve all the credit issues. Next, SHBA client representatives assist you in completing the steps outlined by the lender and work to restore your credit and financial situation. While we are completing these steps you can rent a home that you want to buy. Finally, in the SHBA program your closing costs are covered. How could it be simpler or more effective?
How much does it cost to purchase a home in the SHBA program?
The fee to purchase a home in the SHBA program is based upon your monthly income, so every person’s amount is different. One thing is certain, it would cost you twice as much to purchase a home through a bank or mortgage company. The savings are even more dramatic when you calculate the money saved through budgeting and credit counseling. SHBA client reps are professionals at removing, improving, and settling debts. Finally, when you consider in that SHBA helps cover your closing costs it is impossible to get a better deal. The closing costs alone are often twice what you will have paid to SHBA. From an economic standpoint, you could not get a better deal even if you did all the work yourself.
I am a veteran, can I use my VA certificate of eligibility in the SHBA program?
Yes. The main benefit of a VA Certificate of Eligibility (VA Form 26-1880) is that you can purchase a home with little or no money for down payment. Before you can use a VA certificate you must meet the employment, income and credit standards to obtain a VA loan which is basically the same as FHA. So if you have some credit issues you can’t use the certificate until you get them resolved and qualify for your mortgage. Finally, VA requires that allowances be made for monthly household budget items which often results in a lower qualifying amount. That is, you generally can’t purchase as much home with VA as you could with FHA. Finally, the certificate is good for life, so if you don’t or can’t use it now then you can use it later on your next home.
Will a bankruptcy disqualify my from the program?
A bankruptcy is very common these days and will not disqualify you from the program. Many lending programs like FHA, VA and RDA allow a person to purchase a home just 1-year after filing (BK13) or 2-years after discharging (BK7) a bankruptcy as the case may be.
Do I have to pay a deposit? How much?
Yes each applicant is required to make a deposit at the signing of the lease and the amount varies between 4% to 7% of the purchase price of the home, the amount of the deposit depends on your credit history and the price of the home that you have chosen. In some cases when a tenant can’t come up with the full deposit, a monthly payment plan can be worked out where a small fee will be added to your monthly rent until the deposit balance is paid off in full.