A wave of “boomerang buyers” are dipping their toes back into the housing market after losing their homes to foreclosures or selling their homes in short sales.
Chris Noblejas Sold Townhouse in Short Sale
Former real estate agent, Chris Noblejas, got hit twice during the housing crisis. Not only did his income drop, but so did the value of the townhouse he bought in 2006 for $480,000. He had to sell the townhouse in a short sale for $320,000 in 2010. But like many other “boomerang buyers,” Noblejas was able to purchase a single-family home this year. “I wanted to buy a house again, but I was still nervous because I made such a bad mistake before,” Noblejas says. “Even renting was hard when I first lost my house. I didn’t even know if I could buy again, but I talked to a loan officer and was able to qualify for an FHA [Federal Housing Administration] loan. I plan to refinance that loan into a conventional loan as soon as I can to get rid of the mortgage insurance payments.”
10 Perfect of 2014 Home Purchases
According to John Burns Real Estate Consulting (JBREC), boomerang buyers are projected to make up about 10 percent of the nation’s home purchases in 2014, only to increase even further in 2015 and 2016 as more of the former homeowners become eligible again for new loans.
Hindsight for Noblejas
Noblejas says he now has a better understanding of what it takes to buy a home, and how one needs to be financially prepared for the consequences of making a bad choice, or not planning for potential economic hardship. “I was preparing to make a down payment of 20 percent so I could avoid mortgage insurance, but I decided to keep some more money in cash reserves for now,” he says. “I plan to refinance out of my FHA loan and into a conventional loan as soon as I can. The biggest lesson I learned is how important it is to save a lot more money than you think you need because you never know when you’ll need it.”