A term popularized by the Wall Street Journal, “boomerang buyers” are homebuyers who have previously lost their home to foreclosure, short sale, or bankruptcy. In spite of this setback, these individuals are now ready to enter the housing market once again.
Here are five tips to lend a hand to today’s boomerang buyer:
1. Exercise patience
It’ll take a few years before you can apply for a house loan once more. Lending institutions, by policy, turn away individuals with a foreclosure in their credit history until after a set waiting period, which may take up to several years, depending on the bank or mortgage agency you go to.
2. Fix your credit rating
That foreclosure will show on your credit record for several years, but in the meantime, you can work toward upping your rating by other means. Paying bills on time, for instance, or securing a stable, long-term job that would give you a low debt-to-income ratio – these measures should turn that foreclosure into a single, isolated incident on paper.
3. Save up for the downpayment
Needless to say, saving up is crucial to getting back on the market. Make sure that you have the downpayment and then some: lenders take it as a good sign. It’ll make you much more eligible for that loan.
4. Get pre-approved
Ready your income, assets, identification, credit report, and other essential documentation to get pre-approved for that loan. There’s a fair share of paperwork involved, but the stringent measures is also a means to find out whether you’re well-equipped to be a homebuyer once again.
5. Be responsible
Buy responsibly: select your property and the type of mortgage carefully, ideally with sound advice from a trusted expert in the field. Again, it takes patience, and a conservative mindset to boot. Make sure that you can keep up with the interest rates in today’s climate. If it should take a few more years for conditions to align, allow yourself the time to adjust and make it work comfortably within your means.