There’s a whole new segment of homebuyers in the housing market these days. They’re called boomerang buyers, and what makes them unique is that they’ve been down this road before. These folks lost their homes due to foreclosure or short sale, and are now ready to re-enter the market and become homeowners again.
This group was the result of two significant events: the housing crisis, during which seven million people lost their homes; and for most of these homebuyers, the requirement to have four years of reestablished credit before buying another home.
Nevada is home to many boomerang buyers, as our great state was one of the hardest hit during the Great Recession. Thankfully, we’re rebounding quite nicely, thank you very much, and we’re attracting first-time buyers and boomerangers alike to the housing market. (Welcome!)
The Mind-Blowing Numbers
The stats paint quite an interesting picture. Nationally, RealtyTrac predicts that nearly 3.5 million people with foreclosures in their past could return to the homebuying market by 2022. In the Las Vegas-Paradise market, RealtyTrac predicts a whopping 220,660 potential boomerang buyers. This market is predicted to have the country’s highest number of potential boomerang buyers as a percentage of total housing units.
And while the potential is great, not everyone who has been through foreclosure or short sale is ready to tackle homeownership again. Corelogic reported that less than half the people who have been through a foreclosure since 2000 have returned to homeownership.
Since we’re big on homeownership around these parts, we want to help Nevadans prepare well for re-entry into the housing market.
Tips To Propel You Forward
If you’re approaching (or have hit) the four-year mark of the foreclosure or short sale of your home, and are interested in becoming a homeowner once again, now’s the time to make sure you’re buttoned up from a financial standpoint. Here are a few handy tips and tidbits.
1. Check and repair your credit.
Lenders need to see a history of bills being successfully paid on time. This is especially important for the boomerang buyer, as once the foreclosure or short sale drops off the credit report, everything else on your report carries more weight.
Read our blog on Your Credit Score, Demystified
2. Start working with the pros, ASAP.
Lenders and real estate pros are just that—professionals. They know the real estate biz like the backs of their hands. So who better to help you navigate any obstacles that may slow down the homebuying process? The earlier you start working with them, the more time you’ll have to get your ducks in a row.
Read our blog on 5 Dating Steps To Achieve Happily Ever After Homeownership
3. When it’s time, get pre-approved.
Many real estate agents won’t begin showing homes until a potential homebuyer is pre-approved. Having that stamp of approval lets them know you’ve done the legwork and you’re serious about homeownership. Your lender can help you determine when you’re ready to apply.
4. Down payments need to be bigger.
Remember the days of zero or very low down payments? Those days are over, a lesson learned by lenders after the housing crisis. Be prepared to put down at least 3.5% for an FHA (Federal Housing Authority) loan. If you want to avoid paying mortgage interest, 20% down is still required.
Good news: the Home Is Possible (HIP) program gives qualified homebuyers bonus money up to 5% of the loan value (non-repayable!), to be used for a down payment or closing costs.
5. Your foreclosure may not totally disappear.
If your previous mortgage was backed by the FHA, a record of it won’t be totally gone and forgotten. CAIVRS, a database of government-guaranteed loans, keeps permanent records of FHA foreclosures and short sales. That means that the FHA won’t consider a new loan application until the previous claim has been paid. Only authorized lenders can access CAIVRS to find out if you’re on the list. Conveniently, we have several HIP-qualified lenders poised to help homebuyers just like you.
So to recap, a large number of new boomerang buyers are going to be diving back into the real estate market and, as long as they’ve done their homework, they’ll be welcome