For those struggling to save up for a down payment, you may feel as though home-buying dreams are far out of reach. However, there are changes in the mortgage market process that are making the possibility of owning a home a bit closer to reality. There are also options for business owners and other entities to expand their holdings.
LTV Rules are Changing
In addition to credit score flexibility options, the loan-to-value or LTV requirements for homebuyers are flexing as well. If you’re looking for a commercial mortgage, you’ll likely still need to come up with a sizable down payment. However, for those seeking a single-family home, regulations on the down payment needs are dropping.
Additionally, this LTV break can help those looking to refinance. If you have equity in your home and other debt that’s becoming unmanageable, contact your lender about the possibility of a refinance. You may need to move from a 15 to a 30, but between very low-interest rates and a longer term, you can significantly reduce your monthly financial burden and gain a bit of breathing room. You can see different payment scenarios using this mortgage payment calculator before you sign any mortgage papers.
Credit Score Measurements are More Flexible
If your credit score has taken a hit during COVID-19, be aware that there are mortgage options for those with credit challenges. Both Fanne Mae HomeReady loans and Freddie Mac Home Possible loans can make it possible for you to borrow with very little money down. The Freddie Mac Home Possible can be made available for those with no credit at all.
Credit repair options are also becoming easier to find. If you have dings or hits on your credit report that are making it hard to find work, locate affordable insurance, or get into an apartment, be aware that there are quick credit repair teams out there that can quickly clean up your credit. When your numbers come up, you can then get your preapproval taken care of and act.
Businesses and Other Buildings
Because mortgage rates are so low, it’s a good idea to talk to your lender to determine if now is the time to refinance. Many commercial and church mortgages are balloon products, so you need to refinance every five years.
If you can now refinance your commercial or church mortgage, you can
- likely get a much lower interest rate
- extend the terms of your loan for five more years
- weather the coming challenges with a lower monthly payment burden
Five years of lower payments will allow business and religious leaders to plan their existing resources and seek new ways to move forward.
Low Down Payment Options Abound
There are multiple options for FHA lending, VA lending, and USDA lending. Of course, you must be a veteran to get a VA loan, but a USDA mortgage that will allow you to find a home in the country is a good option for those interested in getting out of the city.
Depending on where you are interested in moving, there may be help from individual states. There are also income requirements for getting a USDA loan, and each region will have different requirements. For example, the rules for USDA home loans in Texas can be different than those for Colorado.
However, if you can find a home in the country that will suit your family, be aware that there are USDA loans that require no down payment at all.
Lenders Can Flex
Fannie Mae or FHA mortgages can offer flexibility to anyone who has missed payments due to COVID-19 income loss. At the same time, you will need to make three timely payments to qualify for forbearance and payment extension.
This break has also been offered to those who own investment properties. For landlords struggling to collect payments and being denied due to eviction protections, banks are in a position to flex and give landlords a payment break and extension.
The financial crisis of 2008 taught banks that they don’t want to own properties. The rapid response and reaction to 2008 that forced the down payment requirements up has been tough on homebuilders and made things very difficult for those who are seeking a home of their own. Luckily, policymakers are using the challenge of COVID-19 to make smart changes that are helping the housing market weather this storm.