4 Reasons Why Borrowing for a New Home is Getting Easier
The biggest risks new homebuyers face currently are with overextending themselves -- getting more home than you need and can afford. Establishing a cohesive budget and knowing your limits can remove this risk, leaving you with a strong sense of confidence and many new reasons to be excited, once again, about you ability to obtain a mortgage and move-in to the home of your dreams.
1. Online Mortgage Shopping
As with many of us, simply finding the time to tackle a new project, such as finding a home and getting a home loan, is a task in and of itself. Luckily, as with most other retail industries, mortgage lending and home buying has now moved online, making it easier than ever before to find time to make your mortgage dreams come true.
Not only can you get a rate quote online, you'll discover that many of the bigger lenders also allow you to become pre-qualified for a loan, lock in a rate, and begin the loan processing phase digitally with just a click of a button from the comfort of your favorite lounge chair. These new "paperwork free" options are striking a chord with both Millennials and Gen Xer's --- the hottest home-buying groups currently on the planet.
You can even search for homes, compare comps, take virtual tours, and engage with your Realtor all online from your laptop or mobile device. These seemingly endless options now mean you can tackle the home-buying process whenever it fits into your schedule, whether you're hanging out at little league practice or enjoying a cup of coffee in your pj's at your kitchen table.
2. Standard Mortgage Options are Making a Comeback
After the housing crisis, lending standards became unreasonably tight, blocking many Americans completely from the dream of home ownership. As the housing market continues to stabilize and Americans are finding jobs once again, lending requirements have begun to relax.
These more relaxed requirements are opening the doors to many who had all but given up, as they are bringing back more flexible options such as smaller down payments, mortgage assistance programs, first-time homebuyer incentive programs, and even programs for borrowers with credit scores as low as 640.
3. Deals are Back for First-Time Homebuyers
Since 2004, we've seen the annual first-time home ownership numbers drop from 43 percent to 36 percent. Why such a drop? High rents, student loan debt and high home prices seem to be stopping many would be homebuyers from being able to take those first tentative steps towards home ownership.
But don't give up ---- there is hope on the horizon! The government has been enhancing programs for first-time buyers, such as lower down payments, tax breaks and student loan forgiveness/payment adjustment programs, that are making home ownership possible for Millennials once more.
If you're a first-time homebuyer, do your research. See if you can qualify for an FHA loan in which you can put as little as 3-3.5 percent down. Also, compare options currently available from Fannie and Freddie Mac. While these require higher credit scores, they offer opportunities to save on your initial loan payments.
4. New Lifeguard at the Mortgage Pool
Thanks to the Consumer Financial Protection Bureau (CFPB), the federal agency established to ride herd over the mortgage industry and focus on protecting consumer's rights after the market crash, many of the home loan processes have been streamlined, requirements made more consistent across the country, and lending disclosures made more user-friendly so that we can all understand the process fully...removing the dreaded "closing sticker shock" moments of the past.
The CFPB is not only managing the practices of the mortgage industry, they are truly focused on protecting and educating homebuyers. The CFPB website is full of tons of helpful hints, explanations, and educational videos to help homebuyers through the entire process and set them up for a lifetime of home ownership success.
It's fair to say that the mortgage industry is back, stable and strong. With all of the new options on the table for homebuyers and the ability to find and apply for a mortgage from virtually anywhere, the future once again looks bright for home ownership in America.