Options for housing that come by are very limited in nature after a felon gets released from prison. There are several resources available that allow felons to own a house. The article covers whether felons are eligible to buy a property in their name.
- What are the Requirements in Buying a Property?
- Different Types of Loans
- Why are FHA and USDA Loans Best for Felons
- How Do Felons Make their Buying Case Strong?
- Course of Action
What Are The Requirements in Buying a Property?
Deciding to own a property is not simple. There are several factors when purchasing a house. Several factors influence the purchasing decision for purchasing a house. Felons must save money for down payments. Felons must focus on maximizing credit score. Getting a pre-approved mortgage is also important.
A credit score is a numerical representation for a credit report which ranges from 350 to 850. The higher the score, your credit report becomes better. Credit score facilitates felons to get a mortgage approved. A credit score helps in taking a home loan to purchase a house. Felons must ensure their credit score is excellent.
A negative credit score negatively affects the opportunity to take a loan.
Felons require the following documents to purchase a house:
- Income tax returns for the past 2 years.
- W – 2 forms for the past 2 years.
- Bank statements for few months
- Proof of mortgage along with rent receipts for the last 1 year.
- A list should be made with details of all debts which include credit cards, student loans, auto loans, and alumni.
- List of all assets with bank statements, real estate details, investment details, and auto titles.
- It is advised felons should not change jobs very easily when they make such huge purchases and they should keep track of all debt payments before seeking approval.
Different Types of Loans
1 Different types of loans offered are: Conventional, FHA, USDA
2 Felons receive financial support on basis of 2 kinds of loans which are FHA & USDA.
3 A Conventional Home Loan generally requires a good credit score which is at least 620.
4 Felons need to make a down payment of 20% from the total value of the house.
5 There is a special indicator in the conventional loan which is called PMI.
6 PMI acts as a guarantee for the lender which assures the lender a mortgage amount will be received if the borrower fails to complete the loan requirement.
7 FHA Loans are popular loans for first-time home purchasers. They are famous because they offer low down payment schemes.
8 Felons need a minimum credit score of 580 or more to make a down payment of 3.5% to get an FHA loan approved.
9 In case the felon has a low credit score, they must focus on improving their credit score before they apply for a loan.
Requirements for FHA Loan
1 The basic requirements for FHA Loan are: proof of employment for felons for the last 2 years, credit score for 580 with a minimum down payment of 3.5% from the total value of the house, felon should not declare bankruptcy in the past 2 years or have a foreclosure in last 3 years, a felon cannot declare delinquent account or any kind of federal debt including restitution.
2 FHA approval requires the following documentation: address proof of last 2 years, felons must provide personal information such as names and addresses of all employers along with salary slips of last 2 months, income tax documents for last 2 years are essential.
3 USDA Loan helps a felon to purchase a home with zero down payment. This is a specific program available only in the USA and military veterans do not qualify.
4 USDA Home Loan charges low-interest rates.
5 USDA loans have the requirements as follows; employment proof for the past 2 years, credit score rating which is 620 or more, no bankruptcy in the last 3 years, no federal debt including restitution, a detailed background check.
6 The documentation includes the name and addresses of all employers with salary slips of 1 month, a divorce decree or a child support agreement which states sending and receiving child support, income tax forms for 2 years, and assets statements for the past month.
Why are FHA and USDA Loans Best for Felons?
1 Lenders do not conduct any background checks for cross-validating criminal history for felons.
2 Lenders obtain the credit report for felons along with proof of residency for the last 10 years.
3 Background checks for any felon depend on credit history and credit score.
4 The current employment status and identity of a person get verified.
5 Criminal history does not play any role in this kind of role.
6 Felons on their release do not have enough money to qualify for a mortgage.
7 Prison time has no source of income and felons cannot pay basic bills.
8 Felon’s families suffer financially till felons serve their sentence.
9 Felons generally have a low credit score and unstable work history.
10 They do not have a suitable job to buy a good house.
11 The only option left is FHA or USDA loans.
How Do Felons Make their Buying Case Strong?
- Felons must focus on their goal of buying a house and be persistent with it.
- Felons can fill a mortgage application with truthful information without fabricating any information.
- They must avoid any kind of fraud or be dishonest in the application.
- Felons must focus on improving their credit score and take professional education with training.
- Felons should focus on expunging their record and getting a job.
Next Course Of Action
Felons must use a positive approach to rebuild their work history and credit score. They should never give up the dream, of purchasing a house. They must focus on buying a house with the right source of income with a substantial bank balance. Felons generally rely on family and friends for any kind of moral and financial support.
FHA and USDA are very reasonable financing options to mortgage a property that felons want to purchase. Felons should focus on doing the right things when purchasing a home. They should also look at the right property before finalizing it. It is a big decision and should not be taken in haste.