One of the most trusted programs for first-time homebuyers is California Dream For All. This provides up to 20% of the purchase price of your first home in the form of a loan that can be repaid when the home is sold. Adobe stock images
Last year, the dream of becoming a homeowner became more difficult than ever. Mortgage rates were high and inventory was scarce, especially for first-time buyers.
Things could improve heading into 2024 as interest rates fall and financial opportunities open up for first-time buyers.
“The real estate industry has always talked with legislators and officials about encouraging people to buy homes instead of renting, because homeowners have a higher net worth than renters,” said former Fresno Chairman Brian Domingos. Because we know it's much higher.” Real Estate Agents Association.
Down payment assistance programs have always helped buyers. Domingos said it's critical that if the government is going to help through down payment assistance, the goal is to get people on the homeownership ladder. As an organization, real estate agents like Domingos talk about this when they meet with elected officials.
One program that Domingos believes is best for first-time homebuyers is the state's down payment assistance program, California Dream For All.
The California Dream For All program provides up to 20 percent of the purchase price of a first home in the form of a loan that buyers can pay back when they sell their home. The repaid funds will be reinvested into programs to help future first-time homeowners enter California's housing market.
Funding for this program from the state is considered long-term and reliable. In many first-time homebuyer programs, funding is not specific. Once that runs out, those in line with applications will ultimately not be able to close their applications.
“I'm just encouraging the government to do creative programs because it allows for some reinvestment. It's like self-funding in a way,” Domingos said. Ta.
With mortgage rates starting to fall in recent weeks, we may see some movement in application activity.
The Mortgage Bankers Association (MBA) reported that although application activity remains slow, this is the bottom. MBA predicted that total mortgage loan originations would increase from an expected $1.64 trillion in 2023 to $1.95 trillion in 2024, while interest rates would fall to nearly 6% by the end of 2024.
According to a recent report, Fannie Mae also expects mortgage transactions to increase in 2024 as single-family mortgage originations recover modestly.
Fannie Mae and Freddie Mac are expected to back more large mortgage loans this year. Although the size of the loan is limited by law, it can assist with financing by purchasing mortgages from lenders, packaging them into securities and selling them to investors. Conforming loan limits set by the Federal Housing Finance Agency have increased 50% since 2020, just as home prices began to soar. This makes it easier and cheaper for first-time home buyers.
Conforming loans often have more accessible borrowing terms, such as lower down payment and credit score requirements, because lenders can sell them to Fannie or Freddie.
For some people in Fresno who don't have down payment assistance, it's the difference between being able to buy and not being able to buy. Real estate agents are facing affordability challenges as inventory shortages are pushing up prices and interest rates.
First-time homebuyers are also facing rising rent prices, creating regional affordability issues. Domingos said these programs are a reliable tool in the toolbox for these individuals to achieve homeownership.
“I think the fact that interest rates are going down is very helpful. And this not only helps borrowers who are likely to get lower mortgage payments, but also motivates some sellers who are getting below mortgage rates. I think it will be,” Domingos said.
Now that interest rates are coming down, buyers may have even more incentive to start shopping again and potentially consider taking action, which will increase the supply of inventory on the market. Domingos said he is optimistic about the first-time homebuyer market in 2023 as the number of transactions increases again.
