Rebounding After Foreclosure, Boomerang Buyers Hit the Market
“Boomerang buyers,” a term given to people who have lost their homes to foreclosure and short sales are expected to make up as much as ten percent of the home buying market this year. Since 2007, more than 4.7 million homeowners lost their homes to foreclosure and short sales, and an estimated seventy percent of them will most likely return to home ownership within eight years.
Rebuilding credit scores and qualifying for home loans after a foreclosure is easier than you think and takes only three to seven years to do if finances are managed well. The homeowners who lost their homes six years ago are back in the market, making 2013 a comeback year for boomerang buyers. John Burns Real Estate Consulting estimates a whopping 500,000 boomerang buyers who lost their homes between 2007 and 2012 will be in the marketplace each year from 2013 to 2016.
To put this in perspective, in Phoenix, one of the hardest hit during the housing market bust, forty percent of Academy Mortgage’s home purchases were made by boomerang buyers.
Almost fourteen percent of homebuyers in California and across the Southwest in the last half of 2012 are people who previously lost their homes to foreclosure or short sales. It is estimated that other large cities hit hard by the housing market crash will see increased numbers of boomerang buyers this year. These cities include Atlanta, Chicago, Miami, Orlando, and Washington, D.C.
Boomerang buyers are entering the housing marketplace at the right time. With housing prices still low and mortgage rates at an all-time low, many are buying houses for less than what they paid for the houses they lost. In many cases, their monthly mortgage payments are much lower, as well.
One boomerang success story involves a former homeowner in Las Vegas. Losing his home to foreclosure and then declaring bankruptcy when the recession hit a few years ago, he recently purchased a $280,000 home with his wife that is much bigger than the one he previously owned and lost. As a matter of fact, he was able to get a 3.74 percent, 30-year fixed-rate mortgage with no money down thanks to the Department of Veterans Affairs, making his monthly mortgage payment almost half what it was before his previous home was foreclosed upon.
Like this homeowner in Las Vegas, many boomerang buyers have already bought homes again. Repairing credit is the first step to owning another home after foreclosure. There is generally a wait time of two to seven years before being eligible for home loans again once the credit report is repaired. In many cases, buyers don’t have to wait the full seven years. Many of the boomerang buyers are averaging a waiting period of about three years before purchasing their new homes.