Buyers are Back After Forclosure
Millions of families lost their home to foreclosure after the housing crash hit. Now, some of those families are back in the housing market. They are known as the "Boomerang Buyers". 2014 is predicted by housing experts to allow these buyers back into the American Dream sooner than ever imagined.
Generally, buyers must wait at least three years after a foreclosure or short sale to qualify for a government-backed Federal Housing Administration mortgage. It can take seven years to get a conventional loan backed by Fannie Mae or Freddie Mac.
Revisions made over the summer to Federal Housing Administration aka , U.S. Department of Housing and Urban Development (HUD), the guidelines allow these previous homeowners with a black mark on their credit history to qualify for a new mortgage as soon as 12 months after a foreclosure or short sale.
See Blog: Changes to HUD in July
RealtyTrac data shows nearly 2.5 million additional homeowners could now become so-called “boomerang buyers” due to this change. That 2.5 million is the number of homes lost to foreclosure or short sale between September 2010 and August 2012 —the date range that in effect was added by the loosening of the guidelines.
That’s in addition to the more than 4.3 million potential boomerang buyers who went through foreclosure or short sale between September 2007 — after the housing price bubble burst —and August 2010 and already may have qualified to buy with an FHA mortgage even under the previous guidelines.
These buyers could still feel some frustration from their credit score and income level which could hold them back from being able to buy again. These qualifications are much tougher now than when many of them originally purchased their previous homes.
The ability and willingness of boomerang buyers to re-enter the housing market over the next year will be a good indication of the long-term health and direction of the U.S. housing market of the next decade. If a lot of these buyers are unable or unwilling to go through the buying a house experience again, the more likely it will be more like a "renter nation".
If you would like more information on your local real estate market, or are first time home buyer not working with a Realtor and would like to schedule a consultation with a qualified Oakland County and Macomb County Realtor, please complete the Lang Premier Properties contact form to have a real estate agent contact you.
Ben Lang is a Birmingham Realtor specializing in Oakland County Real Estate. Ben is an agent with Max Broock in Birmingham, Michigan. See what past clients have to say about Ben Lang. Lang Premier Properties looks out for your best interests when you purchase a new custom luxury home. We always recommend working with an experienced luxury real estate agent when buying a new luxury estate.