Increasing Number of FHA-Eligible Boomerang Home Buyers Means 70 Percent of Those Forced to Sell During Recession Will Regain Homeownership Status Within Eight Years

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Best Rate Home Loans reports that recent analytics figures are seeing an escalating number of previous homeowners who’ve gone through a foreclosure or short sale in the last several years as being eligible for an FHA home loan, and that 70 percent of the 5 million borrowers who’ve foreclosed since 2007 will become homeowners again in the next eight years—all signs that housing inventory numbers will continue to decline and home prices will continue to surge as more FHA borrowers take advantage of the program’s attractive down payment options and interest rates.

The boomerang buyer trend is picking up speed at a time when the housing market is hitting highs it hasn’t seen since 2006.

Best Rate Home Loans reports that recent analytics figures show an exponential increase in the amount of homeowners who were forced to go through a foreclosure or short sale since 2007 as being eligible for FHA loans and bouncing back into the homeowners market in as little as three years after losing their home. Contributing to this surge that the market has seen in late 2012 and early 2013 are low FHA credit score requirements and the added incentives of low down payment plans and interest rates.

This news comes in light of a recent article from Realtormag.org, which mentioned that while nearly 5 million American homeowners have lost their home in the last six years through short sale or foreclosure, an estimated 70 percent of them will become homeowners again inside the eight years following the loss of their home. The article also mentions that an estimated 10 percent of all home buyers this year may end up being boomerang buyers—the popularized term used to describe homeowners who have bought a new home in the wake of a recent short sale or foreclosure.

So why are borrowers who just recently had to deal with the process of a foreclosure or short sale lining up in such heavy numbers to once again purchase homes? The answer begins with the rebounding U.S. job market, and for many boomerang buyers, ends with the increasingly attractive FHA mortgage rates and down payment costs that are being brought to a dramatically increasing number of FHA-eligible borrowers.

CLICK HERE to check FHA eligibility.

Data from Moody’s Analytics, as reported in the Wall Street Journal, sees the number of FHA-eligible borrowers increasing from 285,000 in 2011, to roughly 800,000 currently, and on to an estimated 1.5 million in 2014. Much of this surge can be attributed to the fact that many homeowners went into foreclosure in the early years of the real estate bust, and that the FHA allows responsible borrowers to become eligible once again for a home loan three years after foreclosing—which is four years less than the seven-year wait period that conventional lenders traditionally require.

And due to historically low FHA mortgage rates and down payment plans starting at 3.5 percent—in comparison with what could be 20 percent through conventional lenders—the boomerang trend is picking up speed at a time when the housing market is hitting highs it hasn’t seen since 2006.

When you add in the recent figures that 70 percent of these 5 million previous homeowners (that’s 3.5 million in all) will re-enter the market in the coming years, and that housing inventory is beginning to fall rapidly, all signs point to a few obvious facts for those who’ve financially recovered from a short sale or foreclosure within the last several years: Now is the time to buy, and due to the requisite immediacy of the situation, FHA loans are an incredibly attractive option.

“A forceful return of the housing market is no longer mere speculation,” says Alameda, California Mortgage Expert Garrick Werdmuller at First Priority Financial. “It’s a reality that will only continue to boost home prices and create bidding wars as market inventory declines. Current renters who dealt with a foreclosure or short sale and are financially stable enough to re-enter the market don’t only have the chance of becoming homeowners again through an FHA loan—they also can look at a home purchase as an investment with a potential return that could even out they lost in their last home buying venture.”

About FHA loans:

Since the FHA was created in 1934, the program has insured over 34 million homes.

FHA-insured loans attract a wide array of home buyers by offering more eased credit standards, lower down payment plans and more diverse income calculations than the strict underwriting laws of conventional mortgages.

FHA loan perks:

Down payments starting at 3.5 percent
Relaxed credit requirements
Ability for a streamlined refinance
All-in-one home renewal loans

Click Here to check your FHA Loan Eligibility.

Best Rate Home Loans is a national professional network of approved mortgage lenders and loan providers with expertise in FHA loans and other low down payment or streamlined refinance plans. More information on the Boomerang Home Buyer Program can be had by calling 888-269-5585.

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Mark Madsen
Best Rate Referrals
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