Short Sale Sellers Back in the Real Estate Market
During the worst of the real estate crisis in 2009, 45% of all homes sold nationally were foreclosures or short sales. But in the last quarter, sales of bank-owned properties reached their lowest level since early 2008. What’s more, thousands of home sellers are now outside the three-year penalty period and in the position to once again secure a Federal Housing Administration (FHA) Loan. Supply may be down, but demand is increasing as many families are now able to rejoin the ranks of homeownership. Across the country, short sale sellers are back in the real estate market.
Once the three-year waiting period (from the short sale closing date) has passed, homebuyers can obtain another FHA mortgage for as little as 3.5% down, the shortest route for buyers with less than 10% down.
The alternative – a conventional loan – requires up to a seven-year wait for less than a 10% down payment. That time reduces to four years with 10% and just two years if the buyer can put 20% down.
While conventional lenders often want to know the circumstances surrounding a short sale, the FHA loan is non-discriminatory after the waiting period has passed.
The biggest hurdle for these former home owners is time, and that hurdle is gone now for many of them. However, according to the Federal Reserve Bank of San Francisco, only 30% of borrowers who defaulted on their mortgages in 2001 had taken out another mortgage by 2011. There are plenty more considerations besides time and money; home loss takes a significant emotional toll, as well.
New contracts for home sales this year have been at their highest level in three years. With 2013 figures thus far having showed that the housing sector is in recovery, agents can start looking at a whole new group of return buyers, who are once again able, even if perhaps not quite yet willing, to become home buyers once again. May 2014 bring even more positivity to the housing market.
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