Image via Stuart Miles/Kozzi.com
A few short years ago, we all found ourselves in the midst of the worst recession since the Great Depression. Businesses collapsed. Housing collapsed. Jobs were lost.
There’s no need to recap a history that is still vivid in many of our minds.
The economy, thanks in a large part to housing, is recovering. Not as fast as some would like, but things are improving.
If you found yourself dealing with a short sale, foreclosure, or bankruptcy, you might be wondering if you can ever own a home again. The answer may surprise you.
Boomerang Buyers
Anyone who has completed a foreclosure, short sale, or bankruptcy and now qualifies for a mortgage because the waiting period ended and the foreclosure, short sale, or bankruptcy has fallen off your credit report is a possible boomerang buyer. You owned a home until the economy tanked and regardless of your reasons (job loss, exploding interest rates for adjustable rate mortgages, whatever), you took a bit hit to your credit. Now, enough time has passed that your credit score is no longer affected.
If you qualify for a mortgage and want to buy a home, you are a boomerang buyer.
A few facts:
- 7 million people went through a short sale, foreclosure, or bankruptcy between 2006 and 2014
- 1 million people have already restored their credit
- 350,000 people were return (boomerang) buyers in 2014
- 2 million people will meet mortgage requirements to become return buyers over the next 5 years
What does this mean?
You aren’t alone in this. And, if you choose to, you can own a home again.
For Those with Recent Credit Blemishes
While it’s always better to have the best credit possible before you apply for a mortgage, there are options for people who’s credit hasn’t repaired itself yet.
Some non-bank lenders are lending to buyers who have gone through a foreclosure, short sale, or bankruptcy more recently, according to a recent Wall Street Journal report.
This isn’t a golden ticket for anyone with poor credit.
Lenders still verify income and look at credit history. For a buyer who’s only problem was a lost job or a catastrophic illness – situations beyond their control – who maintained a decent credit score outside of losing your home, you might have more options than you realize.
While some of these lenders will consider someone with a FICO score as low as 500, the vast majority of these buyers had high credit scores before the job loss, illness, etc. and maintained a good credit score after the event. Be prepared to pay much higher interest rates, though, which could fall anywhere between five and 10 percent.
For those who dream of owning a home, all is not lost. Talk to a lender. Check your credit report. And continue to save for a down payment. Depending on your situation, you may qualify for a mortgage sooner than you think. You can be a homeowner again.
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