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Real Help for First-Time Homeowners

By Mark Cole, HLP Chief Executive Officer

With housing prices reaching new highs in many regions of the country, first-time home buyers are finding it more difficult to afford a home. New home sales rose 4.5% in March amid lower mortgage rates. And while the inventory of existing homes is growing, but it’s still very low historically. Smaller price gains since early 2018 have prompted more owners to put their homes on the market.

But all is not lost. There are plenty of resources available to help you qualify for homeownership. Here are a few recommendations on how to get started:

Contact a Nonprofit Credit Counseling Agency. Many of these organizations offer homebuyer education workshops that teach prospective homebuyers everything they need to know to qualify for a mortgage loan. Topics include how to choose a REALTOR®, how the escrow process works and how to save for a down payment.

People attending an all-day, eight-hour workshop will usually receive a certificate that qualifies them for down payment assistance programs in many states. Make sure to work with an organization approved by the US Housing and Urban Development. To explore which agencies offer these workshops, visit https://apps.hud.gov/offices/hsg/sfh/hcc/hcs.cfm

Down Payment Assistance Programs Available from Local & State Governments. These programs provide funds for low- and moderate-income people to purchase their first home. For example, in California, the My Home Assistance program provides a deferred-payment loan – up to 3.5% of the purchase price, or appraised value – for the down payment or closing costs. This program must be combined with a CalHFA first mortgage loan. These borrowers must complete homebuyer education counseling and obtain a certificate of completion through an eligible homebuyer counseling organization. Find out more at https://www.calhfa.ca.gov/homebuyer/programs/myhome.htm

In Georgia, first-time borrowers may qualify for $5,000 in down payment assistance. Applicants for the Georgia Dream Homeownership program must have a minimum middle credit score of 640, must meet income and purchase price limits and must have limited liquid assets. To learn more, go to https://dca.ga.gov/safe-affordable-housing/homeownership/georgia-dream

Freddie Mac’s Home Possible® Advantage Program. This is a conventional mortgage loan with a down payment as low as 3 percent for first-time buyers or lower-income home buyers. Payments can come from a variety of sources, including family, employer-assistance programs and secondary financing. And there are no income limits in underserved areas. To find out more, visit http://www.freddiemac.com/homepossible/

In the meantime, what can a person do to improve their chances of qualifying for a mortgage loan?

Check out HLP.Guru. This new app, created by nonprofit organization HLP, is a practical way for people to address their credit and debt issues to qualify for a mortgage loan. Using analytics, HLP.Guru can help people understand how to build their credit score and how much money is needed for a down payment.

In addition, a “guru” – a housing counselor with a nonprofit counseling organization, is available to help a person build a financial plan that will lead to qualifying for a mortgage loan. Visit the app at https://hlp.guru/

Here’s a good example of how it works. National lenders are providing HLP.Guru free for six months to people who applied for a mortgage loan, but were declined for a variety of reasons. Within six months after enrolling in HLP.Guru, 27 percent of those prospective homeowners became “mortgage ready.” On average, each applicant raised their credit score by 30 points and significantly improved their debt-to-income ratios.

Even after declining the initial mortgage loan application, these lenders help prospective homeowners by staying in contact and encouraging them to make improvements that will lead to a new mortgage loan. Once a person has attained a credit score that qualifies them for a loan, the company contacts the customer and lets them know they can restart their mortgage application.

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Mark Cole is Chief Executive Officer of HLP, a nonprofit mortgage technology company. HLP’s web portal is a one-stop technology solution to help homeowners nationwide ensure that critical documents from distressed homeowners reach mortgage companies. To find out more about HLP’s services, visit www.hlp.org.