Boomerang Buyers is the name given to those that are being offered new mortgages after suffering foreclosure on their previous homes. Foreclosure is a dreadful thing to happen to any home owner. However, under the right circumstances, it is possible get a mortgage after foreclosure.
The stigma and fallout of going through a foreclosure does not last forever. In fact, you might be able to purchase another home sooner than you think. Such ‘Boomerang Buyers’ are no longer uncommon. Although the record of foreclosure remains on your credit report for seven years, that does not preclude you from buying a home. You may have to wait a few years, but you certainly don’t have to wait seven.
Boomerang Buyers and Normal Mortgages
Normally, a Fannie Mae or Freddie Mac mortgage will not be available for at least seven years after a foreclosure. However, if you could not afford your old home for a specific reason that is not likely to recur, you may be able to borrow after three years. Such circumstances include the death of partner whose income made up at least part of the monthly repayment, or perhaps a protracted illness resulting in loss of income.
If you want join the growing army of boomerang buyers, you still need to qualify for the mortgage as normal. Your credit score must be good and you will need the deposit and closing costs. You may have difficulty if you have other credit problems in addition to the foreclosure although the latter will not in itself reduce your FICO score by too much.
VA and FHA Mortgage After Foreclosure
Boomerang buyers can get an FHA mortgage after foreclosure within three years or even after one or two years in the extenuating circumstances described above. You still need a 3.5% down payment. VA mortgages operate in the same way. If you believe you have the necessary down payment and your FICO score is still reasonable, then it is worth applying, particularly if the circumstances leading to the foreclosure are unlikely to recur.
It normally takes people quite a while to recover, both emotionally and financially, after a foreclosure. Many people may not be capable of entering into a new mortgage within four years of foreclosure. It is not uncommon for the emotional stress of a foreclosure and loss of their home to dissuade people from taking another mortgage. At least for a few years. However, if you believe that you can take on home ownership again, it is possible to do so.
If you feel that your credit score has been only slightly affected, have raised the necessary down payment and closing fees, and would have a good debt to income ratio, then there is no reason for you not to apply. You can join the other boomerang that have overcome their difficulties and are now enjoying the security of their own home once again with a new mortgage after foreclosure.