October 1, 2015 | By RGR Marketing Blog

Big Changes in the Housing Market for Working Class Homebuyers

The housing market is undergoing a demographic shift. Over the next ten years, it’s estimated that minorities will form three out of four new households in the United States.

Traditionally, mortgage-lending decisions were based solely on the income of the borrowers, but in the households of some minority groups, it’s not uncommon for boarders, parents, or extended family members to contribute to overall housing costs.

HomeReady Makes Sense in Today’s Housing Market

For working-class, minority and low-income households such as these, homeownership has traditionally been out of reach. Now, Fannie Mae has introduced the HomeReady Mortgage program to help meet the needs of today’s potential homebuyers.

Among other things, this new initiative allows borrowers to include the incomes of boarders and family members when applying for mortgage loans. The program is open to low-income and minority households.

The HomeReady program also lets borrowers qualify with down payments as low as 3%, and the down-payment funding source requirements are much more flexible than those found in traditional mortgage applications.

The mortgage insurance requirement has also been reduced for borrowers with loan-to-value ratios of 90% or better. Homeownership education is required for HomeReady borrowers, but comes in the form of an intuitive, online curriculum.

What About Income Stability?

Critics of the program claim that income from roommates and other family members is difficult to verify, and question whether it can safely be counted when assessing the risk of underwriting a home loan.

However, backers of the HomeReady program are quick to point out Fannie Mae’s own research, which found that these extended households feature a level of income stability that compares favorably with more traditional borrowers with similar incomes.

Either way, the new program is poised to make homeownership a possibility for a larger portion of the population. Is your mortgage business ready to take advantage of this new program?

What HomeReady Means for Your Mortgage Business

Fannie Mae has created two new tools to help lenders serve HomeReady mortgage applicants better.

Their Desktop Underwriter® application provides lenders with a comprehensive, actionable credit risk assessments that quickly and accurately assesses a loan application’s eligibility for the HomeReady program. DU can automatically identify potentially HomeReady-eligible loans.

The Desktop Underwriter’s companion app. Desktop Originator® is designed to help mortgage originators gain an edge against non-participating competitors, earn excellent customer satisfaction ratings, and increase profitability.

Mortgage Businesses: Get Ready for HomeReady

Change can take some getting used to, but initial reports from participating lenders have been very positive, and Fannie Mae’s proprietary desktop applications have dramatically streamlined lender participation.

For mortgage lenders, it seems that getting involved in Fannie Mae’s Homeready Program is the smart move.

And if you think your mortgage business could use a boost in the lead generation area so you close out the year strong, let RGR Marketing help. Get in touch with us today, and we'll make sure your marketing and sales team purchases the highest quality, exclusive mortgage leads in the business. Close more deals, grow your revenue, and finish out the year with a bang.

[Photo Via: PropCy]

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