Zero-Down Loan Program Aims to Expand Mortgage Access – Industry Outlook

By October 18, 2018Industry Outlook

Zero-Down Loan Program Aims to Expand Mortgage Access – Based on new reports, the Neighborhood Assistance Corporation of America is hosting several events nationally and championing the efforts to raise the low rate of homeownership among underserved groups of home buyers. The goal is to help borrowers with low credit scores to apply for 15 or 30-year mortgages with cheaper interest rates. One such recent event in Miami drew thousands looking for a chance to get a no down payment, low-interest-rate mortgage. NACA officials say more than 10,000 potential borrowers have attended various NACA events in cities like Charlotte, North Carolina and Atlanta.

High Debt-to-Income Ratios Prompt More Mortgage Denials – According to real estate data firm CoreLogic, a high debt-to-income ratio has superseded poor credit history as the number one obstacle for mortgage applicants. Though the number of borrowers who have been denied a mortgage has steadily declined over the last few years, nearly one in 10 were turned away in 2017, CoreLogic says. About 30 percent of those denials were attributed to debt-to-income ratio. There has been a gradual increase in the average debt-to-income ratios among mortgage applicants over the last few years, rising from 35.1 in 2012 to 38.6 in 2018, according to CoreLogic. “Rising application DTI is likely a reflection of the erosion of affordability, as home prices have risen much faster relative to wage growth,” researchers note on the company’s blog, CoreLogic Insights. “A typical household’s mortgage payment (principal and interest only), for example, has climbed quickly due to fast-rising home prices and a higher interest rate.”

Mortgage Rates Jump to 7-Year High – According to Freddie Mac, the 30-year fixed-rate mortgage is rising and hasn’t averaged this high since 2011, as it inches closer to the 5 percent threshold. “Rising rates paired with high and escalating home prices is putting downward pressure on purchase demand,” says Sam Khater, Freddie Mac’s chief economist. “While the monthly payment remains affordable due to the still low mortgage rate environment, the primary hurdle for many borrowers today is the down payment and that is the reason home sales have decreased in many high-priced markets.”

Millennials: Homebuying, Retiring Prioritized Over Marriage – Based on Bank of America’s 2018 Homebuyer Insights Report, first comes the house and then maybe marriage or children, according to a new survey of millennials. The survey finds that 23 to 40-year-olds value homeownership above nearly everything else: 72 percent call it a top priority compared to 50 percent who say getting married or 44 percent who say having children are top priorities. “Being able to retire” topped homeownership in the survey at 80 percent. Most millennials equate homeownership with personal and financial success, the survey finds. They also say buying a home makes them feel mature (47 percent); act like an adult (47 percent); and feel independent (36 percent).

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