The housing recession caused problems for many homeowners in Summit County as well as around the country. But as the economy stabilizes and former owners who experienced short sales or foreclosures are in a better position to buy, the landscape is quickly changing. This is why so-called ‘boomerang buyers’ are starting to re-enter the market.
Boomerang buyers are in search of new properties because they want to secure deals before interest rates and home prices increase more than they already have. Also, with rent costs on the rise, it makes better financial sense for this kind of buyer to find an affordable house than to keep renting.
However, boomerang buyers have certain obstacles to overcome. A lot depends on the type of loan they had for their prior home. For instance, if they acquired an FHA loan, they have to wait 3 years before applying for a new mortgage. As long as there is proof of hardship such as a job loss or the death of the primary wage earner, qualifying for financing isn’t as hard as some people assume.
The Waiting Game
In the past, borrowers were required to wait 5 to 7 years before they could be in a position to get a home loan again. But big banks are revising this rule so that homeowners who endured tough financial times during the downturn can take advantage of a loan sooner.
Keep in mind that if you went through a short sale, you’ll probably be viewed in a more positive light by mortgage lenders than those who had foreclosures. However, not all banks or brokers are showing this leniency. That’s why it’s always important to shop around.
Freddie Mac usually demands 4 years after a short sale and 7 years after a foreclosure before buyers can qualify for another home loan. On the other hand, Fannie Mae could ask for 7 years following a foreclosure and just 2 years after a short sale. This 2 year wait, though, is only for buyers that can provide a 20 percent down payment on the home they want to purchase.
Healing Your Credit
In order to prove you’re capable of handling a new mortgage, there ways to improve your position in the eyes of lenders and home builders. First and foremost, take the time to heal your credit. This means you have to be very careful to maintain your balances. If you can help it, try not to have balances over 40 percent of your available credit limit, and when you can, pay your bills on time and in full. The underwriter for the loan that you apply for will examine the last 12 to 24 months of your financial history. How and when you pay your expenses will play a big role in whether or not you are approved.
Want More Info?
Coming back to the housing market as a boomerang buyer can be tough, especially in the Breckenridge real estate market. If you’re starting to feel overwhelmed, I’m here to help. I’ve been in the real estate business in Summit County for a long time, and I can provide you with tips and information you may not find elsewhere.
We can start by reviewing the questions you have about re-entering the market, and move forward together to create a comprehensive plan to help you find the right home for your needs. Feel free to search the updated listings on my website, and when you’re ready to start talking about buying, I’m ready to be your guide.