The Benefits Of Leveraging Down Payment AssistanceAccording to a study this year by the National Association of REALTORS®, first-time home buyers make up 33% of all home buyers, and 86% of those buyers are 28 years old or younger. Among the 28 or younger segment, 26% of them say that saving for a down payment is the most difficult step of home buying. Combine this with low income-prospective home buyers and you’ll find that a lot of your clients are on the hunt for low down payment options.
Due to a lack of knowledge about mortgage insurance or a lack of funds, the idea of having to put down 20% to purchase a home can scare a majority of home buyers away. That’s where a knowledgeable and helpful broker comes in. There are many flexible options out there to create the best solution for your client’s financial needs based on customizable mortgage products. The easiest solution: Share with your first-time home buyers that putting down 20% isn’t necessary anymore. They could put as little as 3% down.
FHAThe Federal Housing Administration (FHA) allows government-backed nonprofits that will lend through subordinate financing up to 105% combined loan-to-value ratio (LTV) to help low- to moderate-income clients obtain housing. Many of these programs can be found through your local city government website. The programs typically require that the client(s) be under the median household income for the county in which they reside. This is consistent with the FHA’s mandate to provide affordable housing for low- to moderate-income clients.
How To HelpGood news travels fast. When you work with your client on achieving their homeownership goal at a price they’re comfortable with, they’ll feel confident referring you to friends and family who are also house hunting. Many loan officers base their careers on referral business. Their business grows exponentially once the news is spread that they can do what others are unwilling to do or don’t know how to execute. Most loan officers will shy away from these types of loans because of the smaller amounts or the extra work it takes to get clients approved. But it all comes down to building and nurturing lasting relationships in local communities while serving the needs of all eligible individuals.
Next StepsThe first major step is to get your clients preapproved and refer them to a reputable real estate agent. Again, referrals are golden. The loan may be $90,000, but the referral could lead the real estate agent to send you a client with a much larger loan later on. The extra work you spend on a lower income or first-time home buyer pays off for the buyer, the agent and your business. It’s all about what you decide to do with it and the work you’re willing to leverage.
End GameFind out which low down payment options are available in your area, and become a pro at calming any fears about having to put down a large down payment. Don’t forget to leverage the knowledge of your QLMS Account Executive along with our easy-to-use tools like GURU and The Answer. If you combine your local knowledge with our QLMS expertise, you can reap the benefits of increased qualified clients and, eventually, happy homeowners who will refer friends and family.
Have you implemented any strategies to help clients with down payment solutions? Leave us a comment.