Creditworthy low- to moderate-income homebuyers are no different than any other homebuyer when it comes to achieving the American Dream of homeownership. Low- to moderate-income homebuyers are faced with many obstacles, like saving for a down payment while rent goes up. When you earn less, it is more difficult to keep your bills paid on time, your credit pristine, and your debt-to-income ratio (DTI) low enough to qualify for a home loan.
As a real estate agent of creditworthy low- to moderate-income homebuyers, and to best help these homebuyers overcome their unique obstacles, you need five traits to help them land a home within their budget.
Have the right experience. Have you sold homes in the price range and locations that qualify for low-income homebuyers? What examples do you have to show that you have been able to find valuable homes for buyers with similar budgets? You should be able to show your borrowers that you have what it takes to get them a good home.
Sometimes working with low- to moderate-income homebuyers requires practice in being creative and thinking outside the box, which can include persuading these homebuyers to consider fixer-uppers or foreclosures, speaking with Community Development Corporations or Local Land Banks, or viewing homes in distressed neighborhoods.
Be familiar with market trends. Do you know the current market trends for low- to moderate-income housing? Top agents know their local real estate market. When asked questions about their area, they know the answer—or they know where to go to find the answer. Top agents know basic factors, forces, and principles that shape the area economy. They know where to obtain current marketplace data, and they know how to use that information to benefit their client.
Know about available mortgage programs. Many of the best opportunities for homebuyers are government-mandated programs that help low-income individuals break into homeownership. These low-income loans offer below-market interest rates and payments, discounts on mortgage insurance, low down payment requirements, and sometimes even down payment assistance.
Many of these programs require the borrower to complete some form of approved homebuyer education. Many of these programs require the homebuyer to live in the home—no vacation homes or rentals allowed. Keep on top of the requirements each program has and the benefits each may offer.
Know the best lenders and mortgage brokers. Before you spend time with any client, make sure they qualify for a loan, and then know their budget. Do you know lenders who have experience providing mortgage loans and products to low- to moderate-income homebuyers? The majority of these lenders offer down payment assistance (DPA) in some form, making it easier to buy a home for many who would otherwise struggle. Other lenders have other resources to help low- to moderate-income borrowers become homeowners.
Know the available down payment assistance programs. DPA programs provide cash to low-income homebuyers who can’t make the down payment or pay the closing costs involved in obtaining a mortgage. Typically, DPA programs are offered by federal, state, and local government agencies, as well as by nonprofit organizations or employers.
The benefits of DPA often include 0% interest rates, deferred payments, and forgivable loans. The amounts available to buyers can be as high as tens of thousands of dollars.
An example of such programs is Chenoa Fund, a DPA program available in all states except for New York.
To learn more, visit Chenoa Fund. Chenoa Fund is a program that offers DPA in the form of second mortgages. We offer five different second mortgage options, each with their own individual underwriting requirements and guidelines, in an effort to provide options to borrowers of any income and any DTI. Some of our options include products for both FHA and Conventional loans; features for some of our products include zero percent interest rates and no monthly payments. Click here to find an approved Chenoa Fund lender.
« February 3, 2020: Chenoa Fund Correspondent Newsletter