At the end of July, Embrace Home Loans will be taking advantage of some agency guideline changes, offering a 3% down conventional mortgage to first-time homebuyers without any of the income and geographic restrictions currently in place. This announcement may seem a little premature, but it is useful information to have as you work with clients over the next couple of months — especially if the recent falloff in purchase money applications is an indicator of what we can expect over the next few weeks.
It is a somewhat odd change, as you would expect those making more than median income to be able to save for a down payment. However, with home prices increasing it can be difficult for anyone to save enough. The change is indicative of the need to meet a broader segment of first-time homebuyers trying to enter the market. Increasing rates and rising home prices mean that more and more potential buyers need creative solutions to get the financing they need. Higher earnings does not necessarily guarantee entry.
The option for those making more than the median income to enter the market with a 3% down payment will mean that those trying to save that 5% down payment — but are never quite there as prices outpaced their savings — have an option. Those that have that 5% down payment might consider making a 3% down payment, using some of that savings to buy down the rate for longer term savings.
It is just another financing option from Embrace that may be beneficial to some of your clients. Our loan officers are available to invest whatever time is necessary working with any of your clients to ensure they have the financing they need to make homeownership a reality.