The housing market is tighter than ever. Real estate prices and mortgage rates are rising. As a result, housing affordability indices are near all-time lows. A typical shopper’s monthly payment has increased by 39% over the past year.
For many families, home ownership is increasingly feeling out of reach. But potential buyers — especially newbies looking for their piece of the American dream — need not despair. There is a wide range of private, non-profit and public resources to help prospective buyers of all backgrounds and income levels with their home buying needs.
However, the trick is to navigate through this array.
For homebuyers with tight savings, for example, there are more than 2,000 down payment assistance programs, including those operated and funded by each of the 50 states.
Many states also offer income tax credits to first-time buyers, which can make that down payment and first year of ownership much more affordable.
Some state and local governments and non-profit organizations provide direct down payment grants to homebuyers, particularly those on lower incomes. For example, Iowa’s FirstHome Grant provides $2,500 toward closing expenses or a down payment for eligible first-time homebuyers, veterans, and individuals in low-income communities. And in conjunction with the state’s new Minority Down Payment Assistance program, eligible Iowans can receive an additional $5,000 grant.
Meanwhile, others offer 0% interest loans against a down payment, which are waived after a certain period of time. Pennsylvania’s HOMEstead program provides up to $10,000 in interest-free loans that are forgiven at an annual rate of 20% over a five-year period. Once those five years are up – as long as the borrower hasn’t refinanced, transferred ownership, or moved – the loan does not have to be repaid.
Another common type of interest-free loan — available through programs like Florida Assist and Illinois’ Access Deferred — involves no payments until the home is sold or refinanced. In these inflationary times, this can be a real pause for the borrower, who will repay the fixed amount of the loan with future dollars worth less than they are today.
The federal government now has even larger programs specifically designed to help people with fewer assets, lower incomes, or poor credit scores secure affordable mortgages.
For example, the Federal Housing Administration insures mortgages with only a 3.5% down payment and offers more flexibility in terms of lower loan values and debt-to-income ratios. Fannie Mae and Freddie Mac fund mortgages with as little as 3% down payment for qualifying borrowers. Military veterans can insure zero-rate mortgages through the Veterans Affairs Home Loan Guarantee Program. And the US Department of Agriculture, through the Rural Housing Service, insures mortgages or even makes direct loans to eligible small-town buyers.
Sorting through these different programs — and evaluating which ones make the most financial sense — is no easy task, especially for first-time buyers. To make matters worse, some lenders participate in certain loan and down payment assistance programs while others do not.
Fortunately, buyers don’t have to navigate this web of programs alone. The nation’s more than 1.5 million real estate agents are able to provide insight into the various buyer assistance programs, particularly for underserved communities that have historically missed out on homeownership wealth. Buyer’s agents can walk first-time visitors through all the options available on-site and point them to programs they might never have found on their own.
These programs not only help new homebuyers; they help everyone because all Americans benefit from more home ownership. New housing construction in thriving communities across the country is critical to the American economy. And study after study shows that homeownership is making people more engaged and invested in their communities.
As interest rates and house prices rise, many potential buyers are becoming increasingly despondent and wondering if they will ever be able to purchase their own property. You don’t have to answer this question alone. And thankfully, there are plenty of resources to help potential buyers in every state, regardless of their wealth level.
Leslie Rouda Smith is President of the National Association of REALTORS and a real estate agent at Dave Perry-Miller Real Estate in Dallas.
https://www.ibtimes.com.au/house-hunters-dont-despair-new-home-still-within-reach-1836162?utm_source=Public&utm_medium=Feed&utm_campaign=Distribution House hunters, do not despair. A new home is still within reach