3 Top Tips for Boomerang Buyers
According to TransUnion, more than 1.5 million potential homebuyers may re-enter the housing market over the next four years. What’s the reason for the hiatus in the first place? Simply put, foreclosure. The unfortunate turn of events regarding the 2008 economy impacted a lot of Americans. The downward spiral left millions packing up and moving out. Over 8 percent of 78 million mortgage borrowers were caught in a tsunami of financial woes.
Like many credit problems, there is a waiting period before one can jump back into the market after a foreclosure. These boomerang buyers must sit out a few years first. However, for many, 2016 means the waiting period is almost complete. Typical waiting periods after foreclosures are 3 years. Depending on your circumstance, it may be more like 7. This means that over the next four years, boomerang buyers may seek homeownership. If you have been on the sidelines waiting, you should know these 3 top tips for slipping back into a comfortable mortgage.
Get Your Credit Up to Par
Pay everything you have on time. Also, improve your debt-to-income ratio. Close small credit card accounts. Even if you don’t have a balance, it acts as open credit so you are better off closing it. Shoot for a credit score of 720 or higher. Over 700 should be fine, but going over 720 is best.
Save for Your Down Payment
Since you have to wait—you may as well be saving. You’ll need at least 3.5 percent for an FHA loan, 20 percent for a conventional loan. Having the 20 percent means you won’t have to pay private mortgage insurance (PMI).
Work with a Lender Early in the Process
If you decide it may be time to move, start working with a real estate professional early in the process. Agents are knowledgeable about which lenders are more willing to work with less than perfect credit. Furthermore, getting preapproval will reduce stress as you start your home search.
Overall, you know what it’s like to own a home. Getting into the right home that you can afford should be a priority. This time, you should feel like a pro throughout the purchase process. Even if you have to wait a few months to fix credit or save for a larger down payment, it may be worth it. However, as a boomerang buyer, expect your purchase process to be slightly longer.
Thinking of buying or selling a home in the La Jolla area? As consistent top producers in real estate, Linda Daniels and The Daniels Group are your La Jolla housing specialists. Working with The Daniels Group will give you with the advantage of having local experts to ensure that you have a successful real estate transaction. From buying, selling and investing to financing options and more, we have the expertise and resources to help you achieve your goals. Call us today at (858) 361-5561 or email us anytime by clicking here.