The decision to purchase a home is not an easy one to make. Many still consider the American Dream to be homeownership, and while having a dream is often a great source of motivation, dreams may also be paired with high expectations and anxieties related to living up to those expectations. This puts many would-be homeowners in a difficult position right at the starting line to homeownership, wondering if they want to run the race at all.
Homebuyers—particularly first-time homebuyers—don’t usually know the housing market like a lender or a real estate agent does—or even how purchasing a home works in general. For example, many homebuyers are filled with misconceptions about homeownership, one of the most common being that the minimum down payment to purchase a home is 20%. And in addition to a lack of correct information, many borrowers are also stopped by fears about their financial and credit situation: 54% of homeowners in 2021 reported that they believed they couldn’t afford a down payment (possible because of the 20% down payment myth), while 32% quoted having a credit score that made it difficult to qualify for a mortgage. Other borrowers are concerned about being able to manage or keep their home after closing.
It would be really convenient to have one tool that can help address, and even overcome, many of these concerns.
The good news is, down payment assistance, and Chenoa Fund DPA for FHA Loans program in particular, does help bridge the gaps between homebuyers and homeownership. Introducing your homebuyers to down payment assistance and teaching them about its benefits can also help you directly address concerns that they have. For example:
1. I can’t afford a 20% down payment. Down payment assistance programs that cover a minimum down payment amount are hard evidence that only a minimum down payment is required to purchase a home. And, as an added bonus, you can talk about how down payment assistance will help your homebuyer retain their savings so they can have reserves, put money into remodeling or repairing a home, purchasing furniture, or just saving it for a rainy day.
2. My credit score is too low to easily qualify for a mortgage. Down payment assistance won’t increase your future homebuyer’s credit score, at least not directly, and not before closing. (But making on-time payments on a mortgage made possible with down payment assistance can improve a credit score.) But, for borrowers with credit scores that still qualify for a mortgage, even if they are on the lower end of qualification, down payment assistance has the potential to save a deal and make mortgage terms better. For example, with down payment assistance a homebuyer can retain savings and have more reserves for closing, or put down a larger down payment, both of which improve the strength of a mortgage file.
3. I’m not sure I can handle homeownership after closing. Ultimately, it’s up to the homebuyer to determine if the time is right for the responsibility of owning a home. But many homebuyer assistance programs offer post-purchase homeownership counseling. With the Chenoa Fund DPA for FHA Loans program, homebuyers receive 18-months of post-purchase homeownership counseling that can help give them peace of mind knowing that they are moving forward with an experienced professional at their side, committed to making sure they succeed. Sometimes just knowing that they won’t be alone is the confidence boost needed to make homeownership change from daunting to desirable.
Buying a home can be difficult and alarming to many future homebuyers, but with the right tools in your pocket you can not just talk about those concerns, but provide solutions to overcome them. Reach out to our Info team today to learn more about CBC Mortgage Agency’s Chenoa Fund down payment assistance, what companies offer it, and how to access it.
CBC Mortgage Agency™ – NMLS 1186381
For licensing information, go to www.nmlsconsumeraccess.org.
Illinois Residential Mortgage License #MB.6761292. Illinois Department of Financial and Professional Regulation, Division of Banking, 100 West Randolph, 9th Floor, Chicago, IL 60601 – 1-888-473-4858. Georgia Residential Mortgage Licensee, License # 1186381