The two most harmful words in real estate

What pops into your head when you hear the phrase affordable housing? Low-income households? Low-cost housing structures? Complicated homebuyer programs?

Unfortunately, the mental images these words conjure harm the real estate market. It’s ironic because affordable housing professionals and programs have helped many families get on a path toward homeownership and wealth creation that benefits entire communities.

But what if we flip those words and say housing affordability? Every homebuyer is looking for a home that’s affordable to them. That’s precisely the job of lenders — ensuring the home loan is affordable to the particular buyer. It makes homeownership sustainable.

My point here is that we should all care about housing affordability. Real estate professionals can be their buyers’ advocate by helping them find resources that make their purchase affordable to them.

Let’s rethink affordability. Instead of the traditional measures of sales price and interest rates, what about the entry cost? The down payment is still the biggest hurdle, and the challenge is growing.

I know. Who identifies themselves as potential beneficiaries of assistance? Our lexicon about affordable housing has made it difficult to have open discussions with buyers about their options.

Consider this: Recent studies by RealtyTrac and Wells Fargo show that many potential homebuyers believe 20 percent down is required. keep reading

87% of U.S. Homes Qualify for Down Payment Help

February 4, 2015

Down Payment Resource and RealtyTrac released a joint analysis on the availability of down payment programs across the country.

Media contact: Tracey Shell, tshell@downpaymentresource.com

Read the full report on RealtyTrac’s website.

Key highlights:

  • Out of more than 78 million U.S. single family homes and condos, more than 68 million (87 percent) would qualify for a down payment program available in the county where they are located based on the maximum price requirements for those programs and the estimated value of the properties.
  • The average amount of down payment assistance across all counties is $11,565.
  • At least one down payment program is available in all 3,143 U.S. counties, and more than 2,000 counties have more than 10 down payment programs available to prospective homebuyers.
  • More than half of programs (54 percent) are Community Seconds, a second mortgage issued by an HFA or nonprofit organization with a very low or no interest rate. The payment on the second mortgage may be deferred or forgiven incrementally for each year the buyer remains in the home. In a typical scenario this could reduce the amount of cash needed to close from $20,000 to $200 (see infographic below).
  • Other major program types:
    • First mortgage loans with below-market interest rates or 100 percent financing.
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