But as the economy gains a sluggish, if not steady, momentum, faith in the housing market has deepened. For those who lost their home in a foreclosure or short sale, however, there is a waiting period of sorts.
That waiting period is heavily dependent on the type of mortgage and an individual’s personal circumstances. To qualify for an FHA mortgage, the waiting period is three years for a foreclosure or short sale, but can be shorter if you can prove that circumstances beyond your control, including lack of employment or medical conditions, led to the default.
For conventional financing, the typical wait period is four years, but can be shorter if there are extenuating circumstances. Nearly seven years since the start of the housing collapse, there’s a growing wave of people who might once again qualify.
“There’s a much broader population of borrowers who are in that situation than ever before,” said Tom Joslyn, senior vice president for Bell Mortgage.
In the end, individual investors and lenders decide when someone is ready for another mortgage, but it’s clear that there’s no shortage of people who want to try again. Bell Mortgage is getting dozens of applications every month from boomerang buyers.
As home prices increase and the recovery solidifies, Joslyn said that lenders are increasingly willing to accept an application from a borrower with less than sterling credit, provided they have other strengths.
“The pendulum was swinging over the last five years to a more onerous credit process,” he said. “That pendulum has slowed.”
‘We learned so much’
Sherri and Sean Ussery of Anoka were surprised when they qualified for a mortgage just three years after going through a short sale in which they sold their home for $50,000 less than they owed on it.
“The thought of having a mortgage again was kind of scary,” Sherri Ussery said.
As the housing market collapsed, Sean Ussery — a finish carpenter — lost about 75 percent of his income. The couple, who have three children, couldn’t keep up with a growing pile of debt and filed for bankruptcy. They lost their home and moved in with friends for six months.
Since then, the construction industry has bounced back, and Sean Ussery is earning more than he did before the recession. The couple saved enough for a down payment, and they have dramatically improved their credit score, enabling them to buy a $170,000 house. It’s a bit of a fixer-upper, he said, but the mortgage payment is $100 less than their rent.
“It was a very humbling experience, and I would never wish it on anyone,” Sean Ussery said of losing their home. “But at the same time, we learned so much.”
Real estate agents say they’re reaching out to former clients who lost their homes to let them know that homeownership is once again a possibility.
John Schuster, a Coldwell Banker Burnet agent who specializes in short sales, contacted Jon Berg earlier this year to encourage him to consider buying again. Berg gave up his home in a short sale in 2011 after enduring numerous setbacks, including a parent’s death and the loss of full-time work.
“It was like my life had become a sink hole,” Berg said.
With a major ding on his otherwise strong credit, he moved into a cramped apartment, where there was little room for him and his son. Two years later, Berg is working full time and nearly debt free.
In June, a community bank helped Berg get a mortgage for a tidy $180,000 rambler with two fireplaces and an extra bedroom for his son. He’s grateful for the second chance.