In today’s purchase market, rising rates, lower housing inventory and higher home prices will leave many potential borrowers wondering if they can afford a new home. So, how can you find new borrowers and open up new markets? Get creative and expand your product offerings to include unique,and often overlooked, mortgage solutions.
First time buyers, particularly Millennials need to be a big part of your plans.
Fannie Mae’s HomeReady, Freddie Mac’s Home Possible, unique‘No Credit Borrower’ lending options and USDA Rural Development loans are ideal for this important millennial market.
In fact, for the fifth consecutive year, Millennials are the biggest segment of the buying market and make up over 66 percent of first time buyers.
First, the HomeReady and Home Possible solutions offer lowdown payments, no money out of pocket options and feature no income limits in certain communities.
Fannie Mae’s HomeReady and Freddie Mac’s Home Possible both feature:
• 97% LTV (1 Unit) and 105% LTV with Community/Affordable Seconds.
• No minimum required borrower contribution – flexible sources of funds can include gifts, grants and Community Seconds.
• No income limits for properties located in underserved or low-income census tracts.
Did you know that 25 percent of sellers age 36 and younger only stayed in their home for six years? And 21 percent only stayed for two to three years. With fixed rates rising, an initial low ARM rate may be right if you have borrowers who plan to move before the first rate adjustment. Think of it as smart Millennial short-term financing.
Did you know that there are millions of responsible,potential buyers who have not established a credit history? You can help them with automated solutions from both Fannie Mae and Freddie Mac that feature low down payments and no minimum borrower contributions.
Have you established a Non-QM product partner? The Non-QM market is expected to grow more than four-fold in the next year according to Housing Wire. These products are designed for borrowers who have the ability to repay but can’t meet conventional or government guidelines. For example, Non-QM solutions can address scenarios such as a lower credit score, higher debt ratios,recently re-established credit history due to a derogatory credit event,and self-employed borrowers in need of alternative income documentation such as bank statements.
A perfect first time buyer solution is a USDA or Rural Development loan which is often overlooked due to the misperception that these loans are for buying a farm or acreage. In fact, USDA loans are eligible for many residential homes in suburban areas.
USDA is the only widely available zero-down payment loan(other than VA which includes military service requirements), but what you may not know is that USDA offers 100% financing based off the appraised value.
USDA Rural Development Loans are designed for purchases.
• Many suburban and rural areas are eligible
• 100% financing without the Military Service Requirement
• Potentially “No Money Out of Pocket” when appraised value exceeds the purchase price.
Finally, there are other creative solutions that can accelerate your purchase pipeline by offering mortgage financing based on future employment under an employment offer or contract. In some cases,the loan can even close before starting new employment.
Looking for a lender that can offer a comprehensive menu of niche solutions will give you a kickstart to close more purchase transactions!