Boomerang Buyers

WHAT IS A BOOMERANG BUYER?

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Boomerang Buyers are former home owners who lost their home during the housing crisis but now are possibly eligible to re-enter the home buying market. Estimates range around 800,000 buyers are now eligible for FHA financing. This number is up from approximately 285,000 in 2011 and is estimated to raise to 1.5 million in 2014.

Buying a house after a short sale

If you went through a short sale and are ready to buy a home again, there are different rules depending on which type of loan you are considering, how much you are planning to put down as a down payment and whether or not you had late payments on your old mortgage before the short sale was completed.

Fannie Mae/Freddie Mac Mortgage VA Mortgage FHA Mortgage
Wait Time 4 years with 10 percent down or 2 years 3 years or
2 years with 20 percent down or  *1 year or less * Immediately
2 years with 10 percent down and extenuating circumstances

You may be wondering about the *Immediately part of this grid. Yes, it is possible for someone to buy a home with an FHA loan right away if they were current on their mortgage payment at the time of their short sale or if they went into default for reasons beyond their control.

If you are a veteran you may be curious about the *1 year or less part as well. Yes, Veterans who have paid their mortgage for the 12 months prior to the short sale and have a 660 or higher credit score may be eligible for a VA loan immediately following a short sale if the short sale is recorded as being paid in full on the credit report.

While it is possible to buy again after a short sale immediately depending on the above circumstances, the more common scenario is to wait for two years and get a Fannie Mae/Freddie Mac loan with 20 percent down or waiting three years and getting an FHA loan with 3.5 percent down.

Buying a house after foreclosure

As with a short sale, the waiting periods are different when buying again after a foreclosure based on which type of financing you are seeking.

Fannie Mae/Freddie Mac Mortgage VA Mortgage FHA Mortgage
Wait Time 7 years or 2 years 3 years
3 years with extenuating circumstances

For most lenders, an extenuating circumstance is a non-recurring event that was beyond an applicant’s control that resulted in a sudden, significant and prolonged reduction in income or extreme increase in financial obligations. Such events are unpredictable, temporary in nature, out of the borrowers control and unlikely to happen again.

**Full article click here

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