The numbers of FHA eligible homebuyers is increasing, and it’s expected that 70% of those forced to sell during the recession will be able to regain homeownership status within the next eight years. Housing inventory numbers are expected to continue declining as home prices surge due to more FHA borrowers taking advantage of the programs attractive down payment options and interest rates.
According to Best Rate Home Loans, recent analytics figures show an exponential increase in the numbers of FHA eligible homeowners who were forced to go through a foreclosure or short sale since 2007. Some are able to re-enter the homeowners market as little as three years after losing their home. Part of the reason for this increase is due to low FHA credit score requirements plus the added incentive of low down payment plans and interest rates.
It may seem surprising that people who have gone through the process of a foreclosure or short sale are already lining up to buy a home once again, but it is thought this is due at least in part to the rebounding US jobs market and of course the increasingly attractive FHA mortgage rates and down payment costs. According to data from Moody’s Analytics, the number of FHA eligible borrowers increased from 285,000 in 2011 to approximately 800,000, and this number is anticipated to rise to 1.5 million next year.
This surge can largely be attributed to the fact that many homeowners went into foreclosure in the early years of the real estate bust, and the FHA allows responsible borrowers to become eligible for a home loan three years after foreclosure. This is four years less than the seven year period required by conventional lenders. FHA down payment plans start at just 3.5% compared to 20% through conventional lenders. The boomerang trend is now picking up speed at a time when the housing market is reaching highs not seen since 2006. If as predicted 70% of previous homeowners re-enter the market during the next few years, then that’s a total of 3.5 million buyers.
Best Rate Home Loans is a national professional network of approved mortgage lenders and loan providers with expertise in FHA loans and other low down payment or streamlined refinance plans. The FHA was created in 1934 and has insured over 34 million homes.
FHA insured loans attract wide array of home buyers by offering more eased credit standards, lower down payment plans and more diverse income calculations than the strict underwriting laws of conventional mortgages.