Rising interest rates and higher home prices have left many low- to moderate-income families in Nevada out of the homebuying market. United Federal Credit Union in Saint Joseph, Michigan, is addressing the affordability gap through a new partnership.
The $4 billion-asset United debuted its partnership with the Nevada Housing Division last month, offering members in the state down-payment assistance through the agency's
Eligible consumers are required to have a minimum credit score of 640, complete a homebuyer education course provided by the NHD and Freddie Mac and meet standard underwriting requirements, among other qualifications. The loan's interest rate is based on one established by the NHD.
In addition to providing additional financial support, the credit union is working to streamline its mortgage application process through the initiative by tracking each step online and keeping members updated along the way, said Aaron Henson, mortgage production manager for United.
"Many of us remember or know the challenges involved in getting that first mortgage, specifically feeling uncertain about the down-payment aspect of the process. … As first-time homebuyers work hard to manage their finances responsibly, we want to make sure that as many barriers and obstacles are removed as possible." Henson said.
Interest rates on mortgages have reached record highs in the past few weeks, as a 10 basis point hike saw the
Recognizing this, the NHD adjusts its own rates to stay competitive and requires applicants to complete classes that cover the components of buying property before receiving any assistance.
"We do want people to get a home that's nice and something that they truly desire, but we just want to make sure that they have a realistic understanding of what kind of costs can impact you when you purchase your home. … When we do these homebuyer education classes, it really does put things in perspective for them," said Rhonda Tolbert, homebuyer programs specialist for the NHD.
Despite the availability of these aid opportunities, the programs suffer from low
Rob Chrane, founder and chief executive of the Atlanta-based lending assistance firm Down Payment Resource, explained how one of the driving factors behind the launch of his firm was to address the knowledge gap by helping financial institutions connect consumers with fiscal aid.
"One of the reasons we started this business was because a lot of people just don't know there's even such a thing as down-payment assistance programs like these. … [Consumers] are going to be dependent on their loan officer, lending institution or perhaps their realtor if they don't know about it themselves," Chrane said.
Chrane emphasized that while "down-payment assistance is not the silver bullet that's going to fix everything," more people will have the opportunity to purchase a home "just by knowing about it and pursuing it."
For underserved markets, these programs can help residents of all backgrounds start building
"In many communities, young families can turn to the 'bank of mom and dad' for help with their first home purchase. … But in low- to moderate-income areas — often minority communities — family support is rare," said Miki Adams, president of the Utah-based CBC Mortgage Agency, which offers down-payment assistance programs and other services to the public.
