According to Best Rate Home Loans, borrowers in Oregon have begun buying homes once more, and are taking advantage of foreclosure and short sales to save an average of $57,000 on property transactions. Many borrowers who have previously been through a short sale or foreclosure are now eligible for an FHA loan, and are becoming so called ‘boomerang buyers.’
This news comes as recent analytics show a huge disparity between the sales prices of foreclosure homes and non-distressed homes. Not surprisingly the inventory of foreclosure properties is falling fast, and the window of opportunity to benefit from this market is rapidly diminishing. RealtyTrac’s most recent report found that the median sales value of Portland homes in March was $209,000 for non-distressed homes and $153,000 for foreclosure homes, a difference of 27%, or an average of $56,000. This is good news for those who had to foreclose or short sell a home at least three years ago, but who have since recovered financially. With the assistance of an FHA loan these buyers could be eligible to re-enter the market at what is still a very buyer-friendly time.
The RealtyTrac report also highlighted the fact that the inventory of foreclosure homes is decreasing rapidly, with filings for April of this year some 45% lower than for the same period last year. Part of this is due to measures implemented by the Obama administration to help underwater borrowers refinance into a better mortgage plan, and options such as the Home Affordable Refinance Program have seen exponential growth in the last year. There are several advantages for borrowers choosing a loan through the FHA, as mortgage rates are currently extremely low, as are down payment rates which start from as little as 3.5%. There is also the fact that many boomerang buyers would not be eligible for a home loan through conventional lenders who often require a minimum of seven years between a foreclosure or short sale and the purchase of a new property.
Chad Scott, Broker/Owener of The Mortgage Money Source, an FHA approved lender in Oregon says, “The amount of savings that Oregon borrowers can reap simply by electing to buy a home with the often meaningless blight on its history of ‘foreclosure home’ is truly remarkable, and with the assistance of an FHA loan, boomerang buyers who tap into this market could not only recoup what they lost financially during the recession, but end up with an investment that yields long-term dividends.”