Despite the coronavirus pandemic, buyers are showing high interest in purchasing properties as they rush to acquire mortgage applications. Unfortunately, the supply cannot meet the volume of demand.
In order to assist or support home-buying, The NAR (National Association of Realtors) released a plan earlier this week with five bullets to expand down payment assistance programs, and alternative credit scoring models, plus, improve FHA loans.
The U.S. housing market is slowly recovering from the last few months. The NAR has estimated that construction is necessary to avoid a much larger gap in housing supply and consequently, higher selling prices.
Also, as we know that the country is currently focusing on racial equality, the following plan would help to bridge the gap between the percentage of white and African American homeowners. As gentrification continues to split the nation, this could continue to help level the playing field.
The plan is as follows:
- Build more homes to increase supply: The lack of housing supply makes converting from renting to owning very difficult. The lack of viable purchase options and resulting competition rapidly push up home prices, precluding some potential first-time buyers from entering the market.
- Build more homes in Opportunity Zones: NAR strongly supports Opportunity Zones as a means by which to invest in the revitalization of economically-distressed areas.
- Increase access to down payment assistance: Saving for a down payment can be the biggest hurdle for renters wanting to become homeowners. In recent years, a growing number of first-time buyers received help from family members with their down payments.
- Strengthen FHA’s loan program: FHA loans have been an important source of financing for first-time buyers and minority households. Shifting federal dollars to strengthen the FHA program could lower mortgage insurance premiums and monthly mortgage payments.
- Expand alternative credit scoring models: Expanding credit scoring models to include rent and utilities payments – and thereby adding more positive payment histories to better demonstrate financial responsibility – can help increase homeownership opportunities for minority and first-time buyers.
The National Association of Real Estate Brokers also released a homeownership plan earlier this month to grant more access to FHA loans and alternative credit scoring models to help heighten the handicap for low-income homebuyers to level the playing field to make the game more fair for all of us.