MReport June 2022

TheMReport — News and strategies for the evolving mortgage marketplace.

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32 | M R EP O RT FEATURE and Freddie Mac, and Federal Housing Administration (FHA) loans. Additionally, there are state, city, and county Housing Finance Agency (HFA) programs that can provide down payment assistance, some as high as 5%. Another great option to help ease affordability concerns are portfolio loan programs offered by lenders or investors. Because the lender sets the standards, portfolio loan programs can help borrowers who might have a lower credit score or limited-to-no savings. Of course, mortgage insurance products also offer borrowers an affordable homebuying option. While some are paid monthly, others can be paid upfront. Some of these upfront options, like a borrower-paid single premium, can even be financed into the loan and will actually lower the borrower's payment without increasing the cash-to-close. Split premiums present yet another option, requiring less upfront cash than a single premium and, instead, tacking on a smaller monthly payment. Another type of homebuyer assistance program designed specifically to help lower-income families afford homeownership are Mortgage Credit Certificates (MCCs). The programs provide qualifying homebuyers the ability to claim a dollar-for-dollar tax credit (up to $2,000 per year) for a portion of mortgage interest paid. This credit is available so long as the borrower lives in the home, so borrowers looking to stay in their home for a while can see significant savings with MCCs. If none of these options are suf- ficient to help a particular set of homebuyers manage affordability, there are still more products that might hold the answer. Non- qualified mortgage (Non-QM) products are a great solution for borrowers who might not qualify using traditional underwriting standards. And for homebuy- ers who are struggling due to inventory issues, a construction- to-permanent product or even a renovation product could be the answer to obtaining a house that meets their specific needs. Each borrower's situation will be different. Some may lack in savings while others have low credit scores or have affordability challenges. Whatever the case may be, lenders should know the variety of product options they can offer for different borrowers' specific situations. There is no one-size-fits-all product that will solve the affordability issue for everyone, but there are plenty of products from which borrowers may benefit. Next Steps O nce lenders are familiar with the broad options they have available to pair borrowers with the products that best meet their needs, there are a few more things they can do to help get borrowers into homes. First, lenders must set and manage expectations—especially in today's homebuying market. Educating borrowers on their spe- cific process will also help lenders prepare their borrowers for how they can best sail through the homebuying process. Be sure to provide borrowers with product and loan structure options, ex- plain the features of those options and lay out the pros and cons for them so they can make an in- formed decision. Communicating clearly and consistently from start to finish makes a huge difference in ensuring high customer satis- faction and in successfully getting borrowers into their home. Lenders should also work closely with referral partners and interested parties such as real estate agents and builders. Setting and managing expectations along with timely communications are key to creating a smooth transac- tion and in increasing the likeli- hood of future referrals. To strengthen the borrower's negotiating position with a prospective seller, it is paramount that a lender obtain a strong preapproval. Once the borrower is ready to make an offer on a home, the lender can collabo- rate with the real estate agent to ensure that the terms of the contract align with the borrower's goals and unique situation. Lenders have critical insights into the borrower's financial situation that may not be seen on paper and these insights can help the real estate agent make an offer that is not only affordable but also sustainable for the borrower. Making an Impact T here are many factors that continue to contribute to a challenging homebuyer market. Lenders must be well-prepared to match borrowers with the right product solutions to help them get into homes. Education is key—for lenders, borrowers, and referral partners. In today's market, it is easy for buyers to count themselves out before they even begin. However, knowing the options available to them can help borrowers get into an affordable home so they can begin enjoying all the benefits that come with homeownership. Everyone in the industry has a part to play in helping combat the affordability issue. Whether you're a lender, real estate agent, or builder, everyone has the power to help borrowers find an affordable path to homeowner- ship—not just during National Homeownership Month, but for every month to come. CHRIS GARAGUSI is a Regional VP at Enact (formerly Genworth Mortgage Insurance). The statements in this article are solely the opinions of Chris Garagusi and do not necessarily reflect the views of Enact or its management. There is no one-size-fits- all product that will solve the affordability issue for everyone, but there are plenty of products from which borrowers may benefit.

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