Many buyers have struggled to purchase a home this year with property values being extremely inflated on a national level. But even in a normal market, it can be difficult for first-time buyers to break in — especially those with income constraints. But a new proposal in the works could soon make it easier for new buyers to secure a place of their own.

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Introducing the LIFT Act

Democratic lawmakers recently introduced a bill that would create a new mortgage program through the Department of Housing and Urban Development.

To qualify, buyers would need to:

  • Be purchasing a home for the first time
  • Be first-generation buyers (meaning, the first in their family)
  • Provide proof of earnings equal to or less than 120% of the area median income

Under the LIFT (Low-income First Time Homebuyer) Act, first-generation borrowers would be entitled to take out a 20-year mortgage at a competitive interest rate. In fact, the Department of the Treasury would subsidize mortgage interest rates so borrowers’ monthly payments would be in line with a new 30-year FHA loan.

Many buyers — especially those with lower earnings — can’t swing a 20-year loan because they need to keep their monthly payments as low as possible, which a 30-year mortgage typically allows for. This new program would allow first-time buyers to not only enjoy competitive interest rates on their mortgages, but also to pay off those loans sooner.

A push to open up the housing market

Low-income workers have long struggled to purchase property, and with this proposal, lawmakers are taking steps to make the housing market more accessible. The LIFT Act isn’t the only proposal in the works to make it easier for new buyers to purchase homes. As part of his campaign, President Joe Biden introduced a $15,000 first-time home buyer credit that would make it easier for mortgage applicants to come up with funds for a down payment.

A tough market to navigate

States have a variety of programs available for first-time home buyers. But the reality is that right now, even with assistance, many buyers struggle to purchase a place of their own.

During 2021’s second quarter, home prices climbed 17.4% on a national level compared to 2020’s second quarter, according to the Federal Housing Finance Agency House Price Index. That’s a huge jump.

Also, while mortgage rates may be nice and attractive these days, there’s still not a whole lot of housing inventory to choose from. The supply of available homes rose slightly over the summer, but there’s still nowhere close to enough inventory to meet buyer demand. This has led to many homes winding up in bidding wars, which typically raise prices even more.

Still, it’s a good thing that lawmakers are invested in helping first-time and low-income buyers own homes. It’s often said that homeownership can lead to more financial stability, and that’s something buyers across income ranges deserve to be able to take advantage of.



Source Google News