Why a 3% down payment mortgage

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Is a 3% down payment mortgage the new normal?

Young borrowers embrace opportunity for a 3% down payment mortgage

Based on the an artical posted on HousingWire.com   Are 3% down payment mortgage the new normal?

By Brena Swanson

Fannie Mae and Freddie Mac introduced 3% down payment mortgage nearly two years ago, and the product has slowly made its way into both big and small lender offerings since then, as the shock and awe of the original announcement wore off.

In a recent interview with HousingWire, Mat Ishbia, CEO of United Wholesale Mortgage, explained why these mortgages are growing in popularity, especially among Millennial buyers. Are 3% down payment mortgage going to be the new normal?

 

His response? “Absolutely.”

It’s a common misconception for borrowers to think they need to put 20% down on a mortgage, which often becomes the biggest roadblock to homeownership.

Ishbia explained that he thinks there are two reasons why 3% down payment mortgage have taken a while to catch on.

  1. Mortgage Insurance

“People have this stigma about mortgage insurance like it’s this horrible thing. So instead of paying mortgage insurance, borrowers put another 40K down.”

  1. Building equity

The other thing is that people think they have to build equity and pay down their mortgage. The way you build equity in houses is not by paying down your mortgage or by putting a bigger number down. I am real big on cash is king. When people run into a financial problem, it isn’t because everyone has too high of a loan-to-value ratio. What happened was they couldn’t afford a payment and then they lost their job.

 

Instead, Ishbia says, “I would put 3% or 5% down and keep that extra 15% in your pocket for when you buy furniture, when your car breaks down or when something happens to your new house. Basically, putting 20% down is like digging a hole in the backyard and burying the money.

“If you have 20% to put on a house, you probably waited too long to buy a house,” he joked.

Freddie Mac announced back in December 2014 its Home Possible Advantage program, an affordable conforming, conventional mortgage with a 3% down payment mortgage to help more first-time homebuyers and other qualified borrowers jump into the market.

Around the same time, Fannie Mae posted a similar announcement, releasing an option for qualified first-time homebuyers 3% down mortgage that allows for a low down payment option.

While some in the industry are hesitant to jump onboard the low down payment idea, Freddie is putting a lot of effort into making lenders comfortable with originating the product. HousingWire recently hosted a webinar with Freddie Mac and U.S. Bank on the secret to closing more 3% down payment mortgages.

Buying a Home

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There are cracks in the foundation. Nothing structural. Nothing that’s going to threaten the stability of the home, but they’re there. Nooks, crannies and holes through which seeps an invisible threat. Colorless, odorless and undetectable by your average human, it is nonetheless the second leading cause of lung cancer in the United States.

Radon gas – even the name sounds ominous, evoking images of radiation and nuclear devastation. Radon gas is created when uranium in the soil decays. The gas then seeps through any access point into a home. Common entry points are cracks in the foundation, poorly sealed pipes, drainage or any other loose point. Once in the home, the gas can collect in certain areas – especially basements and other low-lying, closed areas – and build up over time to dangerous levels. The Environmental Protection Agency of the US Government has set a threshold of 4 pico curies per liter as the safe level. As humans are exposed to the gas over a period of years, it can have a significant and detrimental effect.

Selling Your Home

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Downsizing, upsizing, looking for something new, or any reason in between, you’re considering selling a New York property and we’re ready to help you with 23 full-time Sales Executives, a full-service support staff, legal department, and in-house marketing department. WP Estate invests over $2 million each year marketing properties on New York only, targeting qualified buyers. That’s almost $5,000 per listing. No other company invests in New York like we do.

Choosing to sell your house is a big decision that brings with it a variety of challenges. From attracting buyers to negotiating contracts, it’s helpful to have a professional real estate agent on your side to help reduce stress and lead to the best possible outcome. Finding the right real estate agent can present a challenge in itself, however, with the high quantity of qualified Australian agents out there. To get started with selling your house, you’ll want to compare agents carefully to find an individual who will be most effective in helping you with your particular needs.

Images in post

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On the topic of alignment, it should be noted that users can choose from the options of None, Left, Right, and Center. In addition, they also get the options of Thumbnail, Medium, Large & Fullsize.

Image Alignment 580x300

The image above happens to be centered.

Image Alignment 150x150The rest of this paragraph is filler for the sake of seeing the text wrap around the 150×150 image, which is left aligned.

As you can see the should be some space above, below, and to the right of the image. The text should not be creeping on the image. Creeping is just not right. Images need breathing room too. Let them speak like you words. Let them do their jobs without any hassle from the text. In about one more sentence here, we’ll see that the text moves from the right of the image down below the image in seamless transition. Again, letting the do it’s thang. Mission accomplished!

And now for a massively large image. It also has no alignment.

Image Alignment 1200x400

The image above, though 1200px wide, should not overflow the content area. It should remain contained with no visible disruption to the flow of content.

Image Alignment 300x200

And now we’re going to shift things to the right align. Again, there should be plenty of room above, below, and to the left of the image. Just look at him there… Hey guy! Way to rock that right side. I don’t care what the left aligned image says, you look great. Don’t let anyone else tell you differently.

In just a bit here, you should see the text start to wrap below the right aligned image and settle in nicely. There should still be plenty of room and everything should be sitting pretty. Yeah… Just like that. It never felt so good to be right.

And just when you thought we were done, we’re going to do them all over again with captions!

Image Alignment 580x300
Look at 580×300 getting some caption love.

The image above happens to be centered. The caption also has a link in it, just to see if it does anything funky.

Image Alignment 150x150
Itty-bitty caption.

The rest of this paragraph is filler for the sake of seeing the text wrap around the 150×150 image, which is left aligned.

As you can see the should be some space above, below, and to the right of the image. The text should not be creeping on the image. Creeping is just not right. Images need breathing room too. Let them speak like you words. Let them do their jobs without any hassle from the text. In about one more sentence here, we’ll see that the text moves from the right of the image down below the image in seamless transition. Again, letting the do it’s thang. Mission accomplished!

And now for a massively large image. It also has no alignment.

Image Alignment 1200x400
Massive image comment for your eyeballs.

The image above, though 1200px wide, should not overflow the content area. It should remain contained with no visible disruption to the flow of content.

Image Alignment 300x200
Feels good to be right all the time.

And now we’re going to shift things to the right align. Again, there should be plenty of room above, below, and to the left of the image. Just look at him there… Hey guy! Way to rock that right side. I don’t care what the left aligned image says, you look great. Don’t let anyone else tell you differently.

In just a bit here, you should see the text start to wrap below the right aligned image and settle in nicely. There should still be plenty of room and everything should be sitting pretty. Yeah… Just like that. It never felt so good to be right.

And that’s a wrap, yo! You survived the tumultuous waters of alignment. Image alignment achievement unlocked!