Unbelievable: “41% of buyers believe they need to put down 20% to purchase.” That is from a recent Inman article.
But First – Good Gravy, The Private Sector’s In A Recession!
We had another soft employment report today that indicates that the private sector is in a recession.
ALL of the new jobs created were again in government and government-related sectors (healthcare and education). In addition, many new jobs were part-time.
But, more telling is this: previous “hot jobs reports” (that pushed rates up) were revised down again, proving that these jobs reports are mostly nonsense in any case.
WORST OF ALL: The Sahm Rule has been triggered by today’s report!
Claudia Sahm is a former Fed economist who noted that whenever the three-month moving average unemployment rate is 1/2% higher than the lowest rate we hit over the previous 12 months, we’re in a recession.
We’re clearly in or on the cusp of a recession, and it is now just a matter of how much longer the government can continue the façade of a strong economy – with government spending and shady data.
“At Long Last – Down Payment Assistance Is Finally Cool”
That was the title of this Inman article. While 41% of buyers think they need a 20% down payment, a full 62% of Americans in general think buyers need 20%. Note to agents: This might be good newsletter fodder.
Even without down payment assistance, most of my blog readers know that almost no buyers outside of the jumbo realm need anywhere close to 20% – as there are myriad 1%, 3%, 3.5% and 5% down programs available. And the 3.5% and 5% programs have no income restrictions!
The article’s broader point is this: there are almost 2,400 different down payment assistance programs available across the U.S.
And they come in every size, shape, and color, including:
- Down Payment and Closing Cost Assistance with (a) deferred payments; (b) forgivable loans – usually 2nd mortgages; (c) outright grants aka “free money.”
- Lower Rate or No PMI Mortgages.
- Special Tax Credits that allow buyers to eliminate large chunks of income taxes – often repeatedly.
- Matched Savings Programs where the assistance program matches the buyer’s savings, and often with a multiplier, e.g. buyer puts in $5,000, and the program matches with $20,000.
While these programs can be very beneficial, they are not panaceas. They sometimes come with higher rates, they often take longer to close, and they can confuse buyers and sellers alike (sellers are sometimes reluctant to accept offers that involve down payment assistance – especially if sellers want to close quickly or if they are worried about an appraisal shortfall).
In addition, many down payment assistance programs have strict income limits that shut out many buyers.
BUT – despite these limitations, we are still funding numerous down payment assistance loans every month – and more than we ever have before. This is because these programs are often the only way many buyers can afford to buy in today’s market.
The key, of course, is working with a lender that understands the various programs and how they work. I personally used to be opposed to the programs because I thought they were too complicated, cumbersome, and/or expensive, but my young team taught me otherwise. And thank God that they did, as we are now using these programs to help numerous buyers every month.
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