Millions of Americans lost their homes when the bubble burst in 2006. If you gave up your home to foreclosure or short sale, you probably have painful memories. However, it’s now nearly ten years later, and the housing market has bounced back. You may now be considering becoming a homeowner again. Buyers like you are called, “boomerang buyers” and thousands of them are entering the market this year. Although it isn’t always easy to re-enter the market, it is possible—with some work.
If you are one of these boomerang buyers, here are a few steps you can expect to face along the road to becoming a homeowner (again):
- Prepare to wait – The normal waiting period for getting a loan is four years after a short sale and seven years after a foreclosure. However, there are options like FHA loans and VA loans that do not have these requirements.
- Explain yourself – While you may usually have to wait four to seven years after a foreclosure to get a new home, you may be able to get this waived if you can prove that it was due to circumstances beyond your control (like a health problem or job loss). If you can prove you are back on your feet, and this isn’t likely to be an issue, you may have a better chance of approval.
- You will need a down payment – Even though when you bought last time you might have been able to purchase with little or no cash down, those days are over. Most lenders (outside of special programs like FHA loans) require 20%. Start saving today.
- Improve your credit profile – If you aren’t ready to purchase a home yet, or you have been rejected, put the time you have to good use. Improve your credit score. Pay your bills on time, pay off outstanding debt, and check your credit file to make sure there are no issues that can be removed.
- Expect delays and stress – Red tape happens. You will need pre-approval. You will need more documentation than you ever imagined to prove identity, income, debts and assets. While there was lax documentation years ago, the pendulum has swung in the opposite direction.
As a boomerang buyer, it is important that you work with both a lender and real estate agent that understands your special needs. Reach out to the right sourceand make your dreams of becoming a homeowner come true.