Boomerang Buyers: What to do if you see a
Short Sale in your Rearview Mirror
You've probably seen me mention the term "Boomerang Buyer" in a few of my posts before ...
This is a classification of potential Home Buyer that is contacting me more and more often for info, as of late. As the housing downturn gets further and further in our rearview mirror, I believe that will happen even more often in the future.
Because of the financial and real estate scenarios that gave birth to the "Boomerang Buyer" moniker, many of the questions I receive today surround the topic of Short Sales ... and their effect on Credit Scores. That certainly was the case with one couple that I spoke to a short time ago.
As this couple was marrying soon, they also wanted to know how one future spouse's credit history with a Short Sale would effect their Credit Scores as a couple ... and how it would effect them if they made Mortgage Application for a new home purchase soon.
I pointed out that Credit Scores are based on each individual's unique Social Security Number and their respective histories. Each individual has 3 Credit Scores specific to them and them alone.
In the specific scenario I refer to, it was the male that suffered the earlier Short Sale. So moving forward, even after they marry, it would be only his Credit Scores that are impacted and reflect the past Short Sale.
The impact suffered on her Credit Scores because of the Short Sale most likely ranged from a 70 point drop in Scores to as much as 200 points. Actually the "hit" taken by any individual's Scores depends on their previous Credit rating. The higher their Credit Score prior to the Short Sale, the bigger the "hit" taken.
If there were late payments previous to entering the Short Sale and the Mortgage on the former property was "settled for less than full balance owed" ... and reported that way to the Credit Bureaus by the Lender ... the impact or drop in Credit Scores because of the Short Sale were less impactful.
It is practically impossible to fully predict the actual number of a Credit drop without knowledge of the Credit History and Credit Scores prior to the occurrence. But typically, the mere reporting of a Short Sale will mean a "waiting period" for home loan financing for a minimum of one (1) year , but likely longer timelines will be in play.
Most likely the minimum wait will be two (2) years, unless the circumstances leading to the Short Sale stemmed from major income or employment hardships. (See my post regarding "FHA's "Back to Work - Extenuating Circumstances" Program for further information on that topic.)
Fact is, "Boomerang Buyers" or those having suffered through financial hardships, need to seek out the guidance and assistance of a Mortgage Lender well in advance of when they hope to buy a home again. Each client's financial scenario is (much like their Social Security Number) unique to them. Individualized analyzation and guidance will be called for.
Credit corrections, credit repair, and implementation of the advice I provide will move smoothly ... but slowly. Ample time is needed to successfully move forward with a purchase. So contact me now with your Mortgage questions and needs. We'll get started immediately ...
* Hoping to Buy a Home once again? Looking to Buy, Refinance, or Construct a home in the Lincoln-Way Area, Will County, or elsewhere in Chicagoland? Contact me today! I'll put my 37 years of Mortgage experience and expertise hard to work on your behalf.
I can be easily found at:
Cell or Text: 708.921.6331
Gene Mundt, Mortgage Lender, a Lender with 37 years of mortgage experience, will offer you exemplary mortgage service and advice when seeking: Conventional, FHA, VA, Jumbo, USDA, and Portfolio Loans in Chicago and the greater Chicagoland region, including: The Lincoln-Way Area, Will County, (New Lenox, Frankfort, Mokena, Manhattan, Joliet, Shorewood, Crest Hill, Plainfield, Bolingbrook, Romeoville, Naperville, etc.), DuPage County, the City of Chicago, Cook County, and elsewhere within IL.