Buyers Who Lost Homes to Foreclosure Hesitant About Buying Again
Losing a home to foreclosure doesn’t mean that you can never own a condo or single-family home again. It takes some patience — you’ll usually have to wait at least seven years after losing a home to foreclosure to apply for a conventional mortgage loan guaranteed by Fannie Mae — and work to improve your credit score, but it is possible to become a homeowner again.
However, many boomerang buyers — the term for buyers who can apply for mortgage loans again after losing a home to foreclosure — are not returning to the housing market as quickly as experts expected, according to this story by REALTOR® Magazine.
According to the story, which relies on data from real estate information source CoreLogic, about 1.9 million of the 3.1 million potential buyers who had lost their residences in foreclosure from 2007 through 2013 have now passed that important seven-year mark. But, according to the story, less than 50 percent of these eligible buyers are buying a home again. Some who are 16 years removed from their foreclosures are resisting buying a home.
This is a bit of a surprise. Many economists have said that boomerang buyers returning to the housing market would have a significant impact on its strength. That hasn’t happened, though. According to the story, of the 4.4 million foreclosures of owner-occupied residences that have wrapped since 2000, less than one-quarter of their owners have returned to the housing market.
Have you lost your home to foreclosure and want to buy again? The key step is to work on boosting your credit score. Pay all your bills on time. Pay down as much of your credit-card debt as possible. And if you do pay off an entire credit card, keep that account open. Closing a credit-card account can actually hurt your credit score.
Patience matters, too. Not only do you have to complete the standard waiting period to be able to apply for a mortgage again, you also have to take the time to rebuild your own financial health. You want to make sure that you are financially ready to take on the responsibility of a monthly mortgage payment. Otherwise, you run the real risk of struggling once again to make your housing payment each month.