Tide of Boomerang Buyers are Expected Within the Next 3 Years

August 09, 2015

Tide of Boomerang Buyers are Expected Within the Next 3 Years

2015 has been shaping up as the year for boomerang buyers or repeat home buyers. This population of consumers have been negatively impacted by the financial crisis or hardship which started 7 years ago – either they are 60+ days delinquent on a mortgage loan, lost a mortgage through foreclosure, short sale or other non-satisfactory closure or had a mortgage loan modification. According to TransUnion, a study found out that about 700,000 boomerang buyers are able to re-enter the housing market in 2015 and over the next 5 years, they are also anticipating 2.2 million could re-enter the market.

The study has been analyzed the overall American credit-active population at the end of 2006 (the end of the mortgage Bubble), the end of 2009 (the end of the Burst) and in 2014 to determine consumers’ ability to re-enter the mortgage market. But the stage of re-entry does not take effect immediately because some boomerang buyers who have experienced foreclosures or negative impacts become eligible but they are not yet aware of it or feel overwhelmed by the experience.

According to TransUnion vice president and head of mortgage group Joe Mellman, “It’s been over seven years since the beginning of the mortgage crisis; this is significant because many derogatory items, such as foreclosures and short sales can prevent consumers from qualifying for a new mortgage for a period of time. As consumers responsibly manage their credit and pass these milestones, we anticipate a tide of newly mortgage-eligible consumers entering the market.”

If you are one of the boomerang buyers who have been impacted by the housing crash, then it is important to know the rules when you can repurchase a home again after a foreclosure, short sale or bankruptcy. It is good to know that buyers nowadays have three options when it comes to obtaining financing to purchase a home. In fact, more than 9 out of 10 mortgages are either funded by mortgage giants Fannie Mae/ Freddie Mac, the FHA or VA. If you are looking to buy a home and requires financing, it is more likely that you will be using one of these three financing options and it is important to know the current waiting periods when you can repurchase after hardship.

After Foreclosure:

Conventional – 7 years. If you included the foreclosure in a bankruptcy, you can qualify after four years instead of seven years.

FHA – 3 years. However, FHA buyers can qualify again after just one year if they experienced an economic event

VA – 2 years

After Short Sale:

Conventional – 4 years

FHA – 3 years. If the FHA buyer did not have any delinquent or late payments before their short sale, they are allowed to automatically qualify again for FHA financing. There is also a great FHA program which is called FHA Back to Work Program wherein if a buyer experienced an “economic event” where their household income fell by 20 percent or more for a period of at least six to twelve months, the agency has now reduced the waiting period to only one year.

VA – 2 years

After Bankruptcy:

Conventional – Chapter 7, four years; Chapter 13, two years.

FHA – Chapter 7 and Chapter 13 are both one year.

VA – Chapter 7, two years; Chapter 13, one year.

Reestablishing your credit

Another part of getting you back in the position to purchase again is ensuring you have also started to re-establish your credit since the financial hardship. Even if the required timeline have passed before you are again qualified for conventional or FHA financing again, it is important that you have reestablished and rebuilt your credit and have the required credit score to qualify again for financing. How can you be able to tell that you are again qualified and have the adequate credit score? The first step is to get a copy of your credit report to verify if the financial hardship or discharge is reporting correctly or accurately. This is also to see what your credit scores are. Consumers are allowed one free credit report per year so if you haven’t yet, you can obtain a free copy online. It is also best to speak with an advisor to keep you informed.

Source: http://blog.realestatebook.com/2015/06/24/1-5-million-homeowners-could-re-enter-housing-market-in-next-3-years/http://www.dailyrepublic.com/news/business-local/2015-year-of-boomerang-buyers/