More than 90 percent of Americans say they dream of owning their own home. They feel that homeownership is just as much a part of the American Dream today as it ever was, if not more so. Still, more than half of those feel that owning a home is out of their reach. Several barriers come between aspiring homeowners and seeing their dreams to fruition, including rising home prices, high down payments, and past credit issues.
Fortunately, the worlds of real estate and mortgage lending are changing. New loan options, programs that help potential homebuyers, and other resources are available to help people fulfill their dreams of owning a home. Read on to learn more about real help for aspiring homeowners that you may be able to take advantage of.
Loan-to-Value Mortgages
In the past, the typical down payment for a home was 20 percent of the purchase price. Based on recent reports, the average price of a home in the United States is $400,000, so an average 20-percent down payment would be $80,000. Saving up that much money for a down payment is an intimidating thought. It’s almost impossible for many people, especially if they’re already paying for rent and utilities every month.
Loan-to-value mortgages make down payments much more manageable. With this solution, lenders can use a specific metric to compare the amount of money a potential borrower is requesting to a home’s total value. That, in turn, can result in a down payment that’s far less than 20 percent and help an aspiring homeowner purchase a home much faster and more easily.
First-Time Buyer Programs
First-time buyer programs are also becoming more readily available to homeowners. They may provide help with down payments or closing costs, lower interest rates, tax credits, and other resources to make buying a home easier. Some of these programs are income based whereas others are available to anyone who hasn’t purchased a home within a specific timeframe. They can make a significant difference for potential buyers.
Co-Buying
Another rising option for potential homeowners is co-buying. In the past, people had to buy homes on their own, with a spouse, or with someone in good credit standing as a co-signer. That’s not necessarily the case these days. Now, two or more people, who may or may not be related, can purchase a home together. They can be siblings, friends, groups of acquaintances, or couples that aren’t yet married.
Co-buying offers several benefits. It can make qualifying for a mortgage loan much easier since multiple incomes, credit scores, and other factors come into play. It also makes covering down payments and monthly mortgage payments easier because multiple people share those expenses. At the same time, it can allow people to buy bigger, nicer homes than they’d be able to on their own. Though making co-buying work takes thought and planning, it can certainly be a helpful alternative for many people.
Making the Dream of Homeownership Come True
Several hurdles stand between people and the dream of homeownership. Overcoming them isn’t always easy, but it’s within reach for more people than ever at this point. Numerous resources are now available to aspiring homeowners; those listed here are only a few of the possibilities. They can help break down the typical barriers and make the American Dream come true for more people.