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Make Home Affordability Products Available to Your Buyers

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By: MortgageMatchup.com

Home affordability is more important than ever, especially in a market where inventory is low and interest rates are high. Buyers are likely looking for ways to secure smaller down payments or lower monthly payments and interest rates. The good news is that there are a variety of loan options and products that can help them get into a home now, rather than waiting to save for a down payment or for the market to shift.

Your mortgage broker partner can help you navigate the complexities of these options and find the right fit for each of your buyers. Here’s a breakdown of some of the ways your clients may be able to save hundreds or even thousands of dollars—and how you can leverage them to give you a competitive edge and close more deals:

Saving On the Down Payment

 You’ve likely worked with a client who believed they had to bring a down payment of 20% to the closing table. Nowadays, myriad options make it possible for much lower monies up front, freeing up cash for buyers to use for other necessities. Some lenders have even rolled out 0% down payment programs. For qualified buyers—usually those who meet certain income requirements—some lenders offer the option of no up front down payment. In many cases, the lender often provides the needed funds in the form of a second lien or mortgage, sometimes without interest or monthly payment requirements throughout the loan term.

Additionally, government-funded loans offer first-time homebuyers even more options. First-time homebuyers looking to buy in a rural area may qualify for a USDA loan, allowing them to put as little as 0% down on a property. Similarly, buyers who served in the U.S. Armed Forces could qualify for a VA loan, making them eligible to put 0% down on their home purchase. Additionally, FHA loans, typically based on the buyer’s credit score, allow them to bring as little as 3.5% of the purchase price to the closing table.

And finally, many nonprofits, local programs and government-funded grant options make it possible for buyers to save on their down payment, making homeownership achievable to more clients.

Saving On Interest Rates

 If current interest rates are an area of concern for your buyers, there are options available to help alleviate some of the burden of monthly payments.

Rate buydowns are offered by many lenders and allow buyers to pay up front to secure a lower interest rate. This can lead to significant savings, as rates can sometimes be lowered by as much as 3%. Typically these programs reinstate the original interest rate after a set number of years, allowing your buyers to more comfortably manage any expenses that may come up as they settle into their home. Some lenders even allow for seller concessions to be used toward rate buydowns. Buyers can also refinance and secure a lower interest rate beyond the buydown term if interest rates drop.

Similarly, depending on the market, an adjustable-rate mortgage (ARM) could be another option for your buyers, allowing their interest rate to adjust based on market conditions. This may be a smart choice if rates are expected to drop, or if your buyers don’t plan to stay in their home long-term.

Other Cost-Saving Options

Escrow waivers allow buyers to pay their property taxes and insurance directly rather than wrapping the costs in with their home loan, meaning a lower mortgage payment. This is a great choice for buyers who prefer to manage their own cash flow, though they’ll want to make sure they have an accurate estimate on hand and can plan accordingly for the fees. Lenders may also allow closing costs to be financed as a part of the mortgage.

How to Access Home Affordability Products

If you’re looking to understand more about specific affordability products or whether your buyers qualify, consider partnering with an independent mortgage broker.

Mortgage brokers are local home loan experts who can break down home loan options that can help your buyers save the most money. They can help your buyers get an initial approval or a pre-approval letter before placing an offer on a home, which can increase the strength of their offers. Mortgage brokers are known for their elite client service, competitive pricing and speed due to their partnership with wholesale lenders, meaning they’ll help get your buyer approved faster and get you to the closing table even sooner.

Partner up with a home loan expert in your area to help your buyers get a mortgage they can afford—find your partner today at Mortgage Matchup.

This is a sponsored post submitted by mortgagematchup.com. The representations, information, advice, and opinions presented by YPN Lounge authors, sponsors, or advertisers are solely their responsibility. Read REALTOR® Magazine’s sponsored content disclaimer policy.

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