2 Things Every Boomerang Buyer Should Know

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Scott Schang discusses two things that every person who has lost a home recently should know before trying to buy again.

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There are so many banks that simply run your credit and look at your pay stub. This is nowhere near as thorough as it should be to avoid issues in escrow.

A "boomerang buyer" is defined as someone who has lost their home in the last five years and is now ready to "come back" to the purchase market. This segment is made up of approximately 6 million consumers according to Les Christie from CNN Money. With this now one of the key demographics that real estate agents and lenders are targeting, consumers need to be aware of two very important things before purchasing:

First, know your status. In many cases people included their loans in a bankruptcy only to find out down the road that it was never fully foreclosed, creating what has been dubbed a "phantom foreclosure".

"It's very common that people will wait the necessary amount of years and think they are eligible to buy again, only to find out at the time of escrow that they are not," says Scott Schang, a branch manager for Broadview Mortgage.

According to Fannie Mae and Federal FHA guidelines, the time period until eligibility begins at the date of title transfer.

Second, get your ducks in a row. To get a realistic idea of what they qualify for, consumers need to have all the necessary documentation. This includes recent pay stubs, bank statements, and tax returns. These are used to figure out the total loan amount.

"There are so many banks that simply run your credit and look at your pay stub. This is nowhere near as thorough as it should be to avoid issues in escrow," says Schang. "During the pre-approval process a loan professional can help identify any issues with a previous foreclosure, short sale, or bankruptcy."

For more information about boomerang buyers, the qualifying process, or general comments, please contact the author at (714)538-4404.

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John Krochman