Genz Redefining Housing, Power Of 3% Down Mortgages

🗞️ In This Edition

• Power of 3% down mortgages

• iGeneration is redefining housing

• Real Estate resilience

• Thriving luxury market

• NAR report home sales declined

• and more stories

Plus - 5 DIY ways to transform your patio into a summer escape

📈 Market Numbers

Numbers as of July 24 2024 closing

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🔍 Spotlight

Unlock Homeownership Through The Power Of 3% Down Mortgages

• Low Down Payment Options: Several programs, including Conventional 97, Fannie Mae's HomeReady, Freddie Mac's Home Possible, and HomeOne, allow qualified buyers to purchase a home with only 3% down. This can significantly reduce the upfront costs of homeownership. For example, on a $300,000 home, your down payment would be just $9,000 instead of the traditional 20% ($60,000).

• First-Time Buyer Focus: Most of these programs are designed for first-time homebuyers or those who haven't owned a home in the past three years. They often include income limits (typically 80% of the area median income) and may require completion of a homeownership education course. Credit score requirements vary but generally start at 620 for Conventional 97 and HomeReady, and 660 for Home Possible.

• Trade-Offs to Consider: While these programs make homeownership more accessible, they typically require private mortgage insurance (PMI) until you reach 20% equity in your home. PMI can range from 0.58% to 1.86% of your loan amount annually, depending on your credit score and loan-to-value ratio. This adds to your monthly payments but can be removed once you cross the 20% threshold.

• Beyond 3% Options: For those who don't qualify for these specific programs, other low down payment options exist, such as FHA loans (3.5% down with a credit score of 580 or higher) and VA or USDA loans (potentially 0% down for eligible borrowers). FHA loans have more lenient credit requirements but come with mandatory mortgage insurance for the life of the loan in most cases.

Remember, while these programs can make homeownership more attainable, it's crucial to carefully consider your financial situation and long-term goals before committing to a mortgage. For instance, on a $300,000 home with a 3% down payment and a 30-year fixed rate of 6.5%, your monthly payment (excluding taxes and insurance) would be about $1,816. Always shop around and compare offers from multiple lenders to find the best fit for your needs.

How the iGeneration Is Redefining Home Sweet Home

• Shifting Priorities: Gen Z is showing less immediate interest in traditional homeownership, focusing instead on career fulfillment and experiences. According to NeilsenIQ, this generation is more likely to prioritize travel and meaningful work over buying homes and starting families. This shift could lead to delayed entry into the real estate market for many Gen Z individuals.

• Unconventional Ownership Models: When Gen Z does enter the housing market, they're likely to embrace alternative approaches. A striking 70% of Gen Z respondents in a JW Surety Bonds survey were open to co-purchasing a home with a friend. Additionally, over half view "house hacking" (renting out portions of their living space) favorably, according to Zillow. These trends could reshape how homes are bought, sold, and utilized.

• Unique Home Features: Gen Z homebuyers are expected to prioritize sustainability and functionality over size. Omer Reiner, president of FL Cash Home Buyers, LLC, notes that features like solar panels, sustainable water systems, and multi-purpose spaces are likely to be in high demand. This could influence future home designs and renovations to cater to these preferences.

• Market Impact Still Unfolding: While Gen Z made up only 4% of homebuyers in 2022 according to NAR, it's important to note that many in this generation are still too young to consider homeownership. Sam Morgan of Engel & Volkers Atlanta suggests that the real question isn't whether Gen Z will become homeowners, but rather what type of homes and lifestyles they'll seek as they mature.