May 4th, 2019 8:32 AM by Jackie A. Graves, President
Many of today’s
homebuyers rely on mortgage assistance programs to buy a home. There are more
than 2,500 grants and loans programs nationally, with at least two active
programs in each state, according to a recent report by
the Urban Institute.
The bulk of these assistance programs,
however, are geared toward first-time homebuyers. But the term “first-time
homebuyer” can be misleading in respect to a majority of these programs. The
result is that people who are qualified to apply mistakenly pass up the
opportunity for assistance.
In fact, what qualifies as a “first-time
homebuyer” under many programs is often someone who hasn’t owned a home in at
least three years or more.
This distinction can make all the difference to
applicants who were homeowners more than three years ago and are back in the
market today. Alanna McCargo, vice president for housing finance policy at the
Urban Institute, agrees that this can be confusing for some buyers.
a lot of misperception about what it takes to qualify for these programs.
People are confused by income levels, they think they made too much, or they
don’t realize that they could have owned a home before to qualify,” McCargo
as to who qualifies can pose problems because, without assistance, millions of
families today wouldn’t be able to buy a home.
Barriers to homeownership
are on the rise, new construction for entry-level housing is lagging and
inventory is squeezed. Add in stagnant wage growth, increased consumer debt
including student loans and, and many hopeful homebuyers might feel iced
out of the market altogether.
three main barriers to homeownership are down payment, access to credit and
affordable housing, according to Urban Institute’s report.
for an average family earning a median income has decreased. It’s more
expensive. Access to credit is still a problem. So, obviously if you cannot get
a loan in this environment, given how expensive homes are, then you cannot buy
a house,” McCargo says.
increase in low down-payment lending is perhaps a reflection of some of the
problems Americans are facing. Traditionally, FHA has been the main source of
low down-payment lending, but that’s changed in recent years.
lenders, like Bank of America, as well as Fannie Mae and Freddie Mac have low
“There’s a greater demand for low down-payment assistance
programs because it’s very difficult to save with high rent prices,” McCargo
says. “The only way to get them in is to require less cash at the outset.”
The share of FHA and GSE
(government-sponsored enterprise) loans for first-time homebuyers continues to
increase, according to the report. The combined share for this type of lending
for both sources is 60 percent, which is 20 percentage points higher than the
average before the mortgage crisis. Additionally, first-time homebuyers are
taking out 25 percent more GSE loans than they did in the early 2000s.
Many people who would qualify as first-time
homebuyers are previous homeowners, including those who lost their homes in the
crisis and are just now getting back on their feet.
programs for people who have owned before
hese are programs that allow previous
homeowners to qualify for programs that are targeted to first-time homebuyers.
HomePath Ready Buyer
• Buyer has not owned a home in three or
Fargo’s Your First Mortgage
• Previous homeowners may qualify for the
Be sure to check your state and local housing agencies for
additional assistance. You can search programs by state on HUD’s website.
If you’re ever unsure about a program’s
qualification requirements, terms and rates, ask your lender to explain it to
you and put it in writing whenever possible.
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