OfflineNow that the worst of the foreclosure crisis is in the rear view mirror, former home owners who lost their homes to a short sale or foreclosure are re-entering the housing market. They've spent the last few years rebuilding their credit — and they're ready to buy again.
"We're about three years past the peak of the foreclosures, and that's about the time when most people would qualify for another loan," says Daren Blomquist, spokesman for RealtyTrac. "The market really needs boomerang buyers to maintain the current recovery."
Some boomerang buyers heading back to the housing market may find they have to make down payments of at least 20 percent to qualify for a loan, but others are finding opportunities to put down as little as 3.5 percent or 5 percent.
The wait times for qualifying for a loan can vary depending on the former home owners' circumstances. Typically, the wait times following a short sale or foreclosure are as follows:
Seven-year wait for home owners with a previous foreclosure before they can qualify for a new mortgage through mortgage giants Fannie Mae and Freddie Mac. If the foreclosure was included in a bankruptcy, the borrower has to wait only four years.
Two-year wait for home owners who underwent a short sale before they're eligible for another Freddie Mac and Fannie Mae loan.
Three-year wait for home owners seeking a Federal Housing Administration loan after a foreclosure or short sale. Some home owners who underwent a foreclosure because of at least a 20 percent cut in their pay may be able to qualify for a new mortgage after just a year through FHA's Back to Work program. smartin
If you find yourself in the situation of having gone through a foreclosure or short sale, here are a few suggestions to help you become a homeowner faster.
1) Start building credit asap--the best cure for bad credit is good credit.
2) Begin working with a mortgage broker who assists people with credit challenges, they can make suggestions to help you become ready to purchase again faster.
3) Consider finding a lease option opportunity, call on rental properties as though you were just planning to rent, and see if they are open to an arrangement for you to purchase the property sometime in the future. Negotiate for a timeline that corresponds to what your mortgage broker has suggested to you.
4) Do not do any negative things with your credit. Short term low balance payoffs are much better than buying a new car.
There is a relatively high percentage of people who have gone through foreclosure who never go back to home ownership. If you do not want to be one of that percentage, then plan and execute for success.
Dallin Wall
Real Estate Training Team
Forum Blog Location--A collection of my
"Best of" posts:
http://www.deangraziosi.com/blogs/dwall
you need to save money for the down payment and closing costs; these funds must be in your account for at least 60 days, so don't suddenly deposit large sums of money in your accounts that you are not able to provide tracking records for...
Valerie
“And will you succeed? Yes indeed, yes indeed! Ninety-eight and three-quarters percent guaranteed!” ― Dr. Seuss
"I believe in angels, the kind that heaven sends; I am surrounded by angels, but I call them friends" - Unknown
My journal: http://www.deangraziosi.com/real-estate-forums/investing-journals/59110/...
Valerie, you always have outstanding recommendations.
Continuing on with suggestions for potential boomerang buyers, a number of years ago I was in this situation, having gone through a financially challenging divorce.
My situation was complicated by the fact that I ended up with ownership in a company that was not producing income for me, but blocked me from working in the same industry due to conflict of interest.
I had to analyze my situation and decided that I needed to recreate myself based on my skills, and work in another industry. This is what led me to real estate investing, I used my entrepreneurial skills to create a completely different kind of business.
My suggestion to others is that financial crisis is an opportunity to deeply evaluate yourself and decide what you will do differently in the future to protect and provide for yourself. Those who can perceive the opportunity in challenge become stronger and more adaptable in the future. Those who do not are doomed to remain victims. Life will always test us, but we have the ability to pass the tests we face. It merely comes down to making choices and following through.
Dallin Wall
Real Estate Training Team
Forum Blog Location--A collection of my
"Best of" posts:
http://www.deangraziosi.com/blogs/dwall
For investors too!
www.tw4homes.com website
https://tvallc.isrefer.com/go/RehabLite/reigirl/ FREE SOFTWARE FOR WHOLESALERS, REHABBERS AND AGENTS! Present professional looking deals to buyers and lenders as well as run your numbers and get the ROI.
Femailceo, you always seem to nail it when you make a comment. The items discussed above are helpful for investors also, perhaps even more so than individuals seeking their own property as the investor deals with financial challenges, not just of their own, but also with the sellers they work with. Thanks for mentioning that.
Dallin Wall
Real Estate Training Team
Forum Blog Location--A collection of my
"Best of" posts:
http://www.deangraziosi.com/blogs/dwall