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Foreclosure doesn't kill homeowners' dreams

Home buyers in Washington, D.C., who have been affected by financial difficulties such as foreclosures may be given new homes in the newly rebounding economy. These so-called "boomerang buyers" are often able to afford homes that are even better than those they lost during the recent economic downturn; financial experts say they will be bringing a much-needed cash injection into the recovering housing market.

These people are proof that homebuyers who lost their houses in the recent downturn can make a re-entrance into the housing market. Their time out of the homeowner set may be shorter than anticipated, according to experts, largely because of the potential to rebuild credit after foreclosure. People who have gone through the process can easily qualify for home loans again after just three to seven years, depending on their financial management strategies. Home prices and interest rates are still favorable for people who are seeking to purchase a house after foreclosure, making the market particularly desirable for those seeking more opportunities.

Boomerang buyers are particularly prevalent in areas that had high foreclosure rates, including many locations on the East Coast, in California and throughout the Southwest. These boomerang buyers are uniquely situated to offset lower demand that is perpetuated by rising home prices.

Nearly 5 million people have lost homes since the Great Recession began in 2007. A remarkable 70 percent of those displaced homeowners are expected to return to the market within eight short years after their foreclosure; in the next decade, it is likely that many of these people will successfully purchase other properties. This year is expected to see the first influx of rebound homebuyers, with about 10 percent of home sales attributable to this population.

People who have gone through foreclosure because of financial difficulties should, therefore, not despair about their situations. It is likely that many of these people will be able to fully recover their financial lives before attempting major life changes such as retirement.

Source: Delaware Online, "Foreclosures are no bar for 'boomerang' buyers," Julie Schmit, April 6, 2013

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