Affordable Lending for a Changing Market
June 23, 2016
June is National Homeownership Month, and it's a good time to take a step back to look at how the market has changed, and continues to change, since the housing crisis of 2007-2008.
At the time of the crisis, nerves ran high as consumers wondered whether they could keep their home or even afford to buy one. But the housing market bounced back, and many weathered the storm.
One group in particular, Baby Boomers – born approximately between 1946 and 1964 – believe that homeownership makes financial sense. This is one of the key findings in a recent survey conducted by Freddie Mac. Three out of four Baby Boomers born before 1962 also expressed confidence in a financially secure retirement.
But for other populations, owning that first home may still feel out of reach. The good news is that the landscape has changed since 2008, and there are many more affordable options for these groups.
Where Are the Opportunities?
Two demographics in particular stand out as having the greatest potential for homeownership, today and tomorrow: Millennials (born approximately between 1982-2004 or 1985-2004) and minorities and foreign-born consumers – especially Hispanics and Asian-Americans.
There are more than 86 million Millennials in America today, and while many still rent – despite rising costs – they see the value in owning someday, even if they're not certain they can afford it today.
Similarly, the Hispanic and Asian populations in the U.S. – who are expected to drive 76 percent of growth over the next 10 years – are interested in homeownership, but may not be aware that there are affordable options available to them.
Which Mortgage is Right for Your Borrower?
Our affordable products reflect our commitment to expanding homeownership responsibly, and have been carefully crafted to include flexible features for borrowers and terms that counterbalance the perceived risk of lower down payments.
- Home Possible® is a flexible mortgage option that offers a low down payment of 5 percent, with a maximum LTV/TLTV/HTLTV ratio of 95 percent.
- Home Possible Advantage® offers a 3 percent down and a maximum LTV of 97 percent and a TLTV of 105 percent.
- Both Home Possible and Home Possible Advantage allow incomes up to 100% of the Area Median Income (AMI), and even higher in designated high-cost areas such as California.
Visit the new-and-improved Home Possible web page for more information on Home Possible mortgages, including product comparisons, fact sheets, customizable marketing materials and much more.
The market is changing, and we're changing with it by providing products that extend the possibility of responsible homeownership to those who might otherwise be locked out. Millennials, minorities, underserved communities and low- and moderate-income households offer huge growth opportunities on which you can build future business.
Share these Resources with Your Borrowers
- My Home – helps your borrowers get started on the homebuying process.
- CreditSmart® – provides valuable pre-purchase housing counseling.
- CreditSmart – Steps to Homeownership online tutorial – helps first-time homebuyers fulfill Home Possible's homeownership education requirement.