The real estate market turndown in 2006-2007 took a toll on some Northern Virginia homeowners. The rates of short sales and foreclosures rose dramatically all across the country, and many of the people affected by them are wondering if and when they can hope to re-enter the real estate market.
Paul Scheper at Greenlight Financial in Irvine, CA believes that about three-quarters of those people will seriously consider getting back into homeownership. Generally speaking, to qualify for a government-backed Federal Housing Administration mortgage, people re-entering the market will have to wait three years after their short sale or foreclosure. For those people seeking a conventional loan backed by Fannie Mae or Freddie Mac, the wait can be up to seven years. This means that nationwide, up to 3.4 million people may now qualify for an FHA loan.
That being said, many people in this group still don’t have enough money for a down payment or good enough credit to secure a loan. This is because they fall into one of two main groups – those who had a bad loan that they couldn’t afford, and those whose finances totally crashed. The first group couldn’t make their loan payments, but were able to continue meeting other financial obligations. The second group suffered more dramatically, typically because of divorce, illness, or job loss, and their credit score bore the brunt of the damage.
For people in either category who want to return to property ownership, it’s important to repair any damage done to credit ratings. Maintain a steady income, pay bills on time, keep credit card and loan payments current, and keep track of credit scores. Chances are those scores will increase quicker than anticipated.
So, what can these boomerang buyers expect in terms of wait times? On average, for those who went through a foreclosure, the wait is seven years for a government-backed Fannie or Freddie loan, three years for an FHA loan, and one to two years for an FHA loan for which there were extenuating circumstances such as illness or death of a wage earner. For prospective buyers who went through a short sale, the wait is seven years for a Fannie or Freddie loan with less than ten percent down, four years for the same with ten percent down and two years with twenty percent down, or three years for an FHA loan.
This means that it’s a great time for just about everyone to think about their property ownership goals. Mortgage interest rates continue to be very attractive, and while inching upwards, prices are still very reasonable. The team at JC Advantage can help you take full advantage of the opportunities available to you. Give us a call at 703-442-0007 or stop by the office at 8245 Boone Blvd, Suite 410 in Vienna. If you prefer, contact me directly by email at conor@jcadvantage.com.
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