Homebuyers are Ready to Buy After Foreclosures and Short Sales

RealtyTrac’s article, 7.3 Million Boomerang Buyers Poised to Recover Homeownership in Next 8 Years, stated:

In 2015, the first wave of 7.3 million homeowners who lost their home to foreclosure or short sale during the foreclosure crisis are now past the seven-year window they conservatively need to repair their credit and qualify to buy a home.

As of August 2014, new changes were made to the mortgage waiting period for foreclosures and short sales for specific situations.

Conventional Loans

  • Foreclosures: 7 years from the foreclosure completion date (some applicants may qualify for a conventional loan only 3 years after with extenuating conditions including wage earner death, illness or job loss)
  • Short Sale/Deed in Lieu-Short Sale:
    • 7 year with less than 10% down of primary residence
    • 4 years with 10% down on the purchase of a primary residence
    • 4 years with 20% down on the purchase of a primary, secondary or investment property purchase
    • 2 years with extenuating circumstances, only with 20% down

FHA Loans

  • Foreclosures: 3 years from the foreclosure completion date and transferred back to the lender to the credit report date
  • Short Sale: 3 years from the title transfer date

Department of Veterans Affairs Loans

  • Foreclosure: 2 years from foreclosure completion date and date transferred back to the lender
  • Short Sale: 2 years from previous sale closed date and new owner transfer date

For additional information regarding specific waiting periods for conventional, FHA and/or Department of Veterans Affair loans, visit New Changes to Mortgage Waiting Period.

This is great news for the housing market and real estate investors.  More homebuyers should be ready to purchase over the next 8 years as they slowly come out of the foreclosure or short term window.  These “boomerang” homebuyers are characterized as being Generation X (35-44 year olds) and Baby Boomers.  As investors, it is important to keep the home buying audience in mind to make the property rehab decisions.

How are you preparing for these “boomeranghomebuyers?

Potential Boomerang Buyers by Year