Financing Options For The Housing Market Crash

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Today’s “boomerang buyers” are a product of the housing market crash that began in 2006 and left millions of homeowners in negative equity situations. Home values nationwide plummeted 25-30% by January 2009 and an estimated 5.3 million people found themselves in a foreclosure or short sale situation between 2007 and 2013. Although current home prices remain 17% below peak 2006 levels, the real estate market is showing signs of recovery as evidenced in the upward trend of prices over the last three years [CoreLogic, 2014]. According to John Burns Real Estate Consulting, boomerang buyers who lost a home to short sale or foreclosure were projected to make up about 10% of all real estate sales in 2014. Returning boomerang buyers may now be faced with difficulty acquiring a loan due to their previous real estate history, damaged credit, or limited capital due to recent financial burdens. Despite the obstacles, there are feasible financing options that will help potential buyers achieve their goal of homeownership. Rent-to-Own Option The rent-to-own option is an attractive opportunity for those who would like to own a home but do not have the funds for a down payment or possess a less than desirable credit history. In rent-to-own situations, the potential homebuyer rents the property for a set term, usually 3-5 years, with a small portion of their monthly rent set aside to go toward a future down payment. Typically the home sale price is negotiated at the beginning of the
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