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Boomerang Home Buyers

By
Education & Training with MTI Services Corporation NMLS 1400044

In the years since the recession, the upturn in the economy and improved housing market are giving rise to "boomerang" buyers, or prospective home buyers that went through foreclosure and are now in an improved financial situation.

Helpful info for boomerang buyers:

Waiting Periods - The FHA imposes a 3-year wait to obtain a new FHA loan, and most lenders follow that guideline.  A foreclosure remains on a credit report for seven years, though the negative impact will fade as time passes, according to myFICO.com.  The website explains that a foreclosure is "a single negative item," which does less damage in isolation than in conjunction with other late or missed payments.

There are many lenders willing to work with borrowers who have a foreclosure in their history, as long as they have established solid credit in the intervening years, have a good debt-to-income ratio, and a steady work history.

Be wary - Those "buy-now" loans in advertisements typically involve ugly financing terms.  The interest rate will be higher than market rates and might be adjustable or fixed only for an initial term of three, five, or seven years.  An established history of paying other bills on time can help.

Do your research - Boomerang buyers whose foreclosed loans were backed by the FHA or U.S. Department of Veterans Affairs should be aware of CAIVRS, a government-run database of government-guaranteed loan delinquencies.  Borrowers whose unpaid government-insured debts are tracked in CAIVRS typically can't obtain new government-backed debt.

If a claim has been paid by the federal government on a previous mortgage, a borrower is ineligible until the government claim amount is paid.  CAIVRS isn't publicly accessible, so borrowers must consult an authorized lender to find out whether their foreclosed loan is listed.

New Market - Boomerang buyers who purchased their prior home with little to no cash are often surprised to learn that a down payment is required now.  The FHA requires a down payment of at least 3.5 percent of the purchase price.  The minimum down payment for a conforming loan without mortgage insurance is 20 percent.

Talk to a professional - Sometimes buyers tend to assume they're ready, even when they still have issues that need to be addressed.  That's why it can be helpful to consult a mortgage pro in advance.  According to Bankrate.com, "It is important to start early.  Get in front of somebody and say, 'If I want to buy a house again, what do I need to do?  It might take a year.  It might take two years."

Maria Peace
THE BROKER NETWORK OF CENTRAL OREGON, LLC - Bend, OR
MBA, GRI

Good post with eye-catching title.  Always like posts that share good information.  Thanks.

Feb 09, 2016 02:44 AM
Jon Exley - MTI Serv. Corp.

Thank you for the feedback, I sincerely appreciate it.

Feb 09, 2016 05:16 AM