Boomerang Buyers Important to Sustain Real Estate Recovery

Submitted by Patty Massare on Mon, 2014-02-17 14:32

The term "Boomerang buyers" refers to those who lost their home to foreclosure or short sale, and have since recovered from the financial event that caused them to lose their home.  They have been renting, repairing their credit, and are waiting until they can once again qualify for a home loan.  Boomerang buyers are tired of renting, and have a strong desire to once again own their own home.  They are the ones who need to come back to the market to sustain the real estate recovery and growth.  Think about it:

  • Investors, who drove home sales during the real estate recovery, will reduce purchases as prices climb and will put their money elsewhere.
  • Younger buyers, recent college graduates with student loan debt, may not have the means to buy, especially with the new lending guidelines and tighter debit/income ratios.
  • Underwater homeowners are still 'stuck' and not able to sell to buy a nicer/bigger house . . . many of the traditional move-up buyes are in a holding pattern.

The buyers who are primed to purchase right now (and the ones that will be very important to maintain the housing recovery) are the people who qualify on all levels but have a short sale, foreclosure or bankruptcy on their record.  

Traditionally, FHA's timeline has been 3 years after a short sale and foreclosure and 2 years after a bankruptcy before the buyer could be considered for a new home loan.

However, under the FHA's "Back to Work" program, certain borrowers may be approved for a home loan just one year after a foreclosure, short sale, deed in lieu, or bankruptcy.  Eligibility hinges on whether the borrower suffered a specific financial event during the recession that, through no fault of their own, caused them to lose their home.  

If you're currently renting because you think you can't qualify to buy, check with your lender.  You may be able to get into your own home again sooner than you thought.  Go to HUD's Lender Locator page to find a lender who can help you.

Of course, you can always contact a Lakeside Realty professional who can connect you with a qualified FHA lender to get pre-approved and find out for sure.