A huge effort has been put forth to make homeownership more attainable for first-time and low-income homebuyers. Freddie Mac, a government-sponsored mortgage enterprise, announced that they will back mortgages with down payments as low as 3% of the total value of the home. This offer is called Home Possible Advantage.
While this initially may seem a bit liberal to back a loan with such a low down payment, some mandatory credentials have also been put in place. Additionally, Fannie Mae and Freddie Mac currently finance mortgages with as little as 5% down, while the Federal Housing Administration backs loans requiring as little as 3.5%.
To qualify, an applicant must purchase private mortgage insurance, offer documentation of his or her job status and income, have a minimum credit score of 620 and enroll in homeownership counseling. When selecting a homeownership counseling program to participate in, prospective new homeowners may choose from education programs such as Freddie Mac's CreditSmart.
According to CNN, this offer will be available through Fannie Mae as soon as Dec. 13, and Freddie Mac will start offering the loans March 23. Additionally, Home Possible Advantage will be available as 15-, 20- and 30-year fixed-rate mortgages.
Dave Lowman, executive vice president of Single-Family Business at Freddie Mac relayed that HPA will provide qualified borrowers who don't have the ability to make a large down payment with an opportunity to purchase a home. He also emphasized that this would be a responsible effort to bolster the mortgage market.
What affordable homeownership means for millennials. Millennials may be the primary target for this particular opportunity. Chief Economist Dr. Stan Humphries of Zillow, a real estate company, said the housing market is sure to appreciate that millennials currently renting have confidence in their ability to become homeowners.There is a great advantage to their confidence it is young adults that will propel the future market.
Previously, the issues with millennials moving forward and purchasing a home included limited employment opportunities and crippling student loans. However, the Bureau of Labor Statistics reported that the unemployment rate has dropped below 6% for the first time in six years. This rapid job growth partnered with the increase in mortgage accessibility could be the ingredients for a boom in the housing market.
While student loans continue to be an issue, an affordable US home mortgage makes homeownership far more attainable for young adults.
Academy Mortgage is one of the top independent purchase lenders in the country as ranked in the 2013 CoreLogic Marketrac Report. Visit www.academymortgage.com to find a loan, get a rate, or calculate your payment today.