The last quarter of 2022 has arrived, and our thoughts are prayers with everyone impacted by Hurricane Ian. As a community lender, we understand the importance of being a resource for our business partners, loan officers, and borrowers. It has never been more important to innovate and develop solutions to help all parties reach their goals.
The Opportunity Loan is a proprietary loan that provides up to 100% financing for eligible homes in Majority-Minority Tracts in Jacksonville, FL. This program has many benefits, like no Private Mortgage Insurance and no income limits. While we understand the need for this program, we have been overwhelmed by the community response, and within a short time, Watson Mortgage Corp. has helped almost a dozen families.
While this is an excellent program for new home buyers, mortgage companies are working overtime to find new solutions for buyers; Watson Mortgage Corp. is no exception. Mortgage interest rates haven't been this high since 2007, and while home prices have come down incrementally, the mortgage rate still makes financing challenging for some buyers. Here are three things that borrowers should address with their Real Estate and Mortgage professional.
- Buy-Down – This is a strategy that borrowers can use to obtain lower interest rates by paying additional monies to reduce the interest rate at closing. Also referred to as Discount Points, this one-time upfront fee can reduce the interest rate for the entire loan term. In some situations, it's beneficial for borrowers to pay less down and apply their money to Discount Points. Sometimes sellers will buy down the interest rate to help the homeowner finance their home and complete the sales transaction.
- ARM mortgages – Once given a bad reputation before the mortgage collapse of 2008, Adjustable-Rate Mortgages provide a solution that allows borrowers to pay a lower interest rate for a period that will transition to a higher rate or back to the market rate. The time frames of Adjustable-Rate Mortgages usually span between three and 10 years. Borrowers opt for an ARM rate to keep their initial payment lower in hopes that they can refinance when market rates become more affordable.
- Lease to Own – This is a bit of a counterintuitive suggestion coming from a mortgage or real estate company, but is still a viable option. In lease-to-own arrangements, borrowers can opt to pay an agreed-upon rent, with an opportunity to buy the home at the end of the lease term. Fees associated with lease-to-own arrangements would act like a standard leasing agreement but may include an option to buy fee, too. In some of these deals, sellers agree to apply a portion of the rent to the home price if the buy option is exercised. This is a creative way to save for a down payment and wait for interest rates to become more advantageous. Remember to use the real estate agent and loan advisor that helped you when you opt to buy your home (Watson, Watson, Watson!).
The mortgage and housing industry is doing its best to combat the challenges in the market, and Watson Mortgage Corp. is working hard behind the curtain to help borrowers find solid solutions to buy a new home. If you have questions about these mortgage products and strategies outlined in this article, contact a Watson REALTOR® or Loan Advisor Today!