Last Updated on February 27, 2022 by Luke Feldbrugge
Housing affordability is an increasing concern, but there is a population of 41 million people, 45 years or younger in the U.S. who are “mortgage ready” according to a Freddie Mac report.
That’s a lot of potential first-time buyers. Homeownership is critical for building long-term wealth, and most first-time homebuyers rely on obtaining a mortgage to become homeowners.
The housing market has exploded since 2020. According to the National Association of Realtors, 31% of all home purchases since 2020 have been made by first-time home buyers. With rising house prices, lack of inventory, and tight lending standards following the COVID-19 pandemic crisis, the path to homeownership has become even more challenging for potential first-time homebuyers. The good news is that the pandemic made remote work increasingly mainstream and as a result, homebuyers had the option of leaving large urban areas to live in different parts of the country.
The bad news is that rising house prices and interest rates, lack of inventory, and tight lending standards have made the path to homeownership even more challenging for potential first-time homebuyers, especially for minorities. Blacks, Hispanics and Latinos have been particularly struck by the pandemic crisis since they are overrepresented in low-wage sectors or jobs that cannot transition to remote work.
Despite a Black-White / Hispanic and Latino-White homeownership gap, the Freddie Mac report found there are many “Mortgage Ready” Blacks and Hispanics and Latinos that earn enough to afford a home in their area. Some residents living in high-cost areas may need more time to save for the required down payment.
Understanding the future of homeownership means understanding the needs of the borrower demographic. This level of insight is key to helping lending teams, REALTORS® and real estate agents help future homebuyers qualify for a mortgage in today’s marketplace.
Buyers facing affordability issues that are ready to purchase need access to cost-saving products. Freddie Mac highlights low-down-payment products as an avenue of entry for these buyers. This can be very impactful in bridging the gap from “Mortgage Ready” to ready-to-purchase.
What if you want to buy a home but are “near mortgage ready”? The best course of action is to understand what steps you need to take in order to make the transition to ready to buy. Counseling and financial literacy curriculums to understand how to build and maintain strong credit are a good course of action to help you reach your goal.
For Heroes that are able to get an FHA or USDA loan, there are even more savings to be had! Homes for Heroes is the largest, nationwide program of its kind. When you sign up, we’ll connect you with a Homes for Heroes real estate and mortgage specialist who will learn your needs and walk you through the process of finding the home you want and save you money too.
Homes for Heroes specialists are in your local area, so they know what the housing market is like where you’re trying to buy or sell. There is no obligation, fees, or extra paperwork when you use Homes for Heroes. Sign up today and take the first step to finding your new home.