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30 | M R EP O RT FEATURE J une is National Homeownership Month. While it is a time to celebrate homeownership and the benefits it brings to families, neighborhoods, and communities, it is also a time to examine the barriers many homebuyers may be facing. It almost goes without saying that borrowers today are strug- gling in their efforts to purchase a home. Prices are reaching new heights for many reasons. First, housing demand is outstripping the available supply, contributing to strong appreciation in home values. Additionally, increasing labor and material costs, as well as supply chain challenges, have caused new home construction costs to rise, so adding new in- ventory still poses an affordability challenge. What's more, all-cash offers, institutional buyers, and frequent bidding wars are driving home prices even higher—some- times over asking price and even above the appraised value—and snapping up inventory faster than some buyers can move. If this was not enough, higher interest rates are reducing home- buyer purchasing power and rising inflation rates are decreas- ing home affordability. While this long list of challeng- es is affecting buyers across the board, it is particularly impact- ing first-time homebuyers. Some of them may not have adequate savings and certainly do not have home equity to help them in today's hectic market. However, whether it's a bor- rower's first time buying a home or not, the lender is without a doubt one of the greatest resources in helping the borrower navigate through choppy seas to their desired destination of homeownership. Therefore, lend- ers must be more prepared than ever to help borrowers address affordability concerns so that they can achieve their dream of homeownership. Sharpen Product Knowledge to Match Buyers With Their Most Affordable Option O ne of the most important things lenders can do is sharpen their knowledge of all products. As guidelines are expanding, and market shifts affect the attractiveness of differ- ent products, it's important for lenders to understand the various options available to best meet the borrower's mortgage financing needs—especially those options that may be outside the norm or outside the lender's usual comfort zone. Today's complex market requires some creativity on the lender's part to find the right solu- tion for each borrower's unique situation. Take adjustable-rate mortgages (ARMs), for example. Due to rising interest rates, ARMs may provide a better alternative to a traditional 30-year fixed-rate loan for some borrowers. An ARM can help borrowers obtain a lower rate and thus a lower payment for the initial, fixed-rate period, whether it be five, seven, or even 10 years. ARMs are great for bor- rowers who will likely sell their home within that initial, fixed-rate period and are also great for those who anticipate strong earnings growth during those initial years. Lenders also must be familiar with their low-down-payment products that can help bor- rowers with affordability. There is a plethora of options that lenders should be familiar and comfortable with, such as U.S. Department of Veteran Affairs (VA) loans, the U.S. Department of Agriculture's Rural Housing program, Housing & Urban Development (HUD) Section 184 Indian Home Loan Guarantee program, Fannie Mae's HomeReady and Freddie Mac's Home Possible programs, the standard 97% loan-to-value (LTV) products offered by Fannie Mae Navigating the Mortgage Market As June recognizes National Homeownership Month, here are some ways lenders can help borrowers find their way in a challenging and confusing housing market. By Chris Garagusi