A “boomerang buyer” is the nick-name given to people who lost their home due to foreclosure or a short-sale during the Great Recession, who are “back” buying a home again. Realtytrac reports:
In 2015, the first wave of 7.3 million homeowners who lost their home to foreclosure or short sale during the foreclosure crisis are now past the seven-year window they conservatively need to repair their credit and qualify to buy a home. More waves of these potential boomerang buyers will be moving past that seven-year window over the next eight years corresponding to the eight years of above historically normal foreclosure activity from 2007 to 2014.
What many boomerang buyers may not realize is that you don’t have to wait seven years to buy again. The seven year weight period applies to people who had a foreclosure and want to buy again using a conventional mortgage for financing. Someone who had a short sale or foreclosure can buy again after a 3 year wait period using an FHA mortgage. After seven years, following the distressed sale, the home owner may be able to refinance out of their FHA mortgage and into a conventional loan assuming they qualify.
FHA mortgages are a great stepping stone for boomerang buyers who are re-entering the housing market. In addition, HUD has recently reduced the annual FHA mortgage insurance (paid monthly), making FHA a more competitive mortgage. FHA mortgages offer reduced down payment requirements with loan limits up to $517,500 for 2015 in King, Snohomish and Pierce Counties.
If you have had a foreclosure or short sale, I’m happy to help you to get ready to buy your next home. Click here if I can provide you with a mortgage rate quote.