Down Payment Assistance Programs –What Housing-Industry Pros Should Know

By Leo.Rosete@nafinc.com January 15, 2019

DPA

 

One of the biggest hurdles to your clients purchasing a home is often saving for a down payment but it doesn’t necessarily need to be. There are down payment assistance (DPA) programs in cities, counties, states and even nationally that empower buyers of all types to purchase a home. There may be private programs available too. The main problem is, people often don’t know about them or they sound too good to be true. They’re not!

A savvy Real Estate Agent or lending professional who is aware of these programs and can share them with their clients in order to make “distant-future buyers” into tomorrow’s buyers by just sharing a little knowledge. Taking time to learn about and track the programs may be half the battle.

Making Time to Keep Up

DPA programs often have limited budgets, like most government or nonprofit entities, so you may have a narrow window for each one. If you’ve recommended a few that were already closed to new applicants, it can be discouraging and result in a reluctance to get your clients’ hope up. But if you implement a system for tracking them, however, you might end up being successful more often than not. 

This does take a little time and effort, but if you make a date with yourself or an office assistant to commit to a few hours a month, you can create a database of the programs in order to cross match any new, former or existing clients who might fit the criteria.

One idea is to create an email sub account and subscribe to updates from every program you encounter. Keep those email updates where they can be put into the database quickly and easily. Each time you sit down with a new client, do a search for open programs. In your first client consultation, find out what they do for a living and any relevant demographic information you can glean from them in order to find potentially thousands of dollars they may put toward a down payment.

Types of Programs

Government and private agencies hoping to assist underrepresented groups with home purchases can have a broad range of criteria for their programs. Some examples are:

  • Community heroes. These are often targeted to law enforcement personnel, first responders, EMTs, medical professionals, educators and veterans.

  • Recent college grads. These programs are often popular in states that have a large college population that leaves once they receive their education. DPA is great enticement to get educated grads to stay and put down roots in the region.

  • Minority programs. Regions that have a large immigrant population may want to encourage others who come from the same area to settle in a community where they feel “at home.”

  • Historic areas. Historic districts often have a lot of charm but might need a lot of TLC because of the age of the area. Also, local historic preservation foundations might have very strict rules for how landmark homes are to be rehabilitated. But if a buyer is committed, there are often grants and improvement loans available to those who want to commit to restoring a once stately home to its former glory. And these regions are often a magnet for corporate rehab as well, attracting chic small businesses and hip restaurants.

  • The Chenoa Fund. Check to see if this program is available in your area. It can save purchase-ready buyers months or years of saving as it allows them to buy with 100% financing.

  • Leverage your lending partners. Lenders such as New American Funding have DPA programs logged in their underwriting records and can quickly do a state-by-state search of programs it services.

With a little research, planning and upkeep, you can create a quick-search option that might make you a superstar in your clients’ eyes, which could not only result in an immediate home sale for you but can cement a loyal client relationship where they happily recommend you to friends and family for the foreseeable future.  

Your key team when buying a home

By Leo.Rosete@nafinc.com July 17, 2018

 

 

 

Getting to know all the people who will join you for all or part of your homebuying journey is like meeting new people on the first day of school or the first day at a new job. There will be a lot to process, which alternately will prove exhilarating and overwhelming.

But just as you triumphed (okay, survived) those tension-filled events, we’re confident you’ll come through the homebuying experience with flying colors, too.

However, to calm any lingering anxieties about the adventure you’re about to undertake, let’s make some early introductions so you’ll better understand who these key players are and the distinct roles they will play in helping you find and finance a home:  

Real Estate Agent

Your agent is your captain. Therefore, he or she must be knowledgeable, personable, patient, reliable, trustworthy, honest, direct, motivated, a solid negotiator and totally committed to your success.

This leader also will have his or her own network of connections and resources to serve you before, during and after the transaction – somebody who can recommend a top-notch lender or a plumber who will come out to your house at 11 p.m. on a Sunday to fix your leaky faucet.

To find such a saint, ask friends, business associates, members of organizations you belong to, and professionals in related fields that you use. Also, drop in at a few open houses in areas where you would like to live. The agents you meet will likely have a good knowledge of the neighborhood and perhaps possess exactly the qualities and style you’re looking for. Observe how they interact with clients.

When you have three strong candidates, interview each one. Ask each agent to bring along a list of every transaction they’ve been a part of in the last 12 months. You may quickly discover that the agent prefers working with sellers and not buyers.  

Additionally, ask how long they have been an agent, if they work full-time, if they have a specialty (foreclosures, short-sales, property type, etc.) and professional designations to match. If you must sell a property before buying your next one, pay special attention to how they market their properties. Do they offer professional photography (including video and drone) and staging? Ask how they will specifically market your listing.

Also inquire about their team. The last thing you want to deal with is one of their assistants who rubs you the wrong way.

From their activity sheet, also ask if you can spot-check their references, which, when you meet or call them, may trigger a new set of questions. Above all — after asking these references if their agent followed through on their promises and represented their interests to the best of their ability — ask if they would use the agent again. This is the ultimate test of customer satisfaction. Also Yelp your candidates to see what past clients are saying about them.

Buyers typically don’t pay their agent a commission, so that’s one expense you won’t incur. That’s usually the seller’s responsibility. But if you have to sell first, anticipate paying a commission between 4 and 8 percent (harder-to-market properties may justify the higher commission). There has been downward pressure on commissions owing to new real estate players entering the market.

A point of note, unlike lawyers, real estate agents don’t bill by the hour. Rather, agents do most of their work below the water line. It’s said that good agents spend at least nine hours working behind the scenes for every hour spent in the presence of clients. So, seek a busy, competent agent, but also one who has the time to serve you well.

Real Estate Broker

When you’re selecting your agent, you’re also selecting their broker. It’s a package deal. If your deal sails through, you might never meet the broker. However, should a buyer-seller dispute arise, you want to know your broker has your back and your agent’s, too, with a deep bench of business, legal and educational resources that either of you can readily access. The broker should be the acknowledged backstop of your team.

Mortgage Lender

Unless you recently hit the lottery or received an inheritance, you will likely need to finance your home purchase and thus require the services of a mortgage lender. If you have solid credit and you’re gainfully employed, lenders will knock down your door to serve you. Many homebuyers often start their search for financing with a financial institution with whom they already have a financial relationship for their checking, savings and investing.

At the same time, many homebuyers will prefer working with a mortgage broker or a mortgage banker, who specialize in home lending. Mortgage brokers are independent contractors who shop various wholesalers for the best rate and then add their mark-up for their time and trouble, whereas mortgage bankers use their own or borrowed capital to originate and service loans in their own name. Whoever you ultimately select should have the breadth of knowledge and experience to match you with exactly the right loan product for your need. Also, ask each lender you’re considering if they service their own loans. Lenders who service their own loans are often more accountable, not to mention easier to get on the phone if a mortgage payment issue or other discrepancy arises.

Property Inspector

An old real estate rule of thumb says buy the worst house on the best block, then fix it up to live in or sell. But you could be Einstein and still not be aware of all the serious defects hiding in a home. Leaky pipes, faulty wiring, defective locks, uneven floors, termite-infested siding, missing roof tiles, etc.

Any one of these defects could cost you thousands of dollars in repairs, turning what seemed a housing bargain into a bust. So, in your defense, hire a qualified inspector who will examine your potential home from foundation to roof. Members of the American Society of Home Inspectors (ASHI) must have performed 250 property inspections to earn that designation, so the organization is a good source for referrals. Your real agent will likely be another source but remember that many home inspectors rely on agents for business, so there could be a conflict of interest. Lastly, home inspections aren’t intended to be X-rays of your home so out-of-view hazards like mold or asbestos may require calling in a specialist if you suspect these health threats exist.

Escrow Officer

If your broker is your backstop, your escrow officer is the umpire, the neutral third party that receives and disburses money or documents for the primary transacting parties.  They are the bridge that gulfs the natural distrust between buyer and seller. Strictly speaking, they’re not on anybody’s team, but you need a good one on yours to ensure every detail of every transaction is buttoned up correctly to everyone’s satisfaction. Real estate is a document-driven enterprise, where every “I” needs to be dotted and every “t” crossed!

Financial or Tax Advisor

A home is an asset, like stocks, bonds or precious metals. If you’re buying one, you need to understand how a home purchase will impact your overall finances. If you’re selling, you need to know, among other things, if the sale will trigger a taxable event, such as a capital gain. The sooner you can integrate your advisor into your team the better; otherwise you could be paying more than your fair share of taxes.

Attorney

You may need a lawyer who specializes in real estate, not your next-door neighbor who handled your divorce.  Their input will not be needed in every transaction, but it’s good to know you have one ready to come off the bench when his or her expertise is needed.

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Buying a home often involves a team of professionals. The more you know about who’s on your team at the outset and the specific role each member plays, the more confident you’ll feel about finding and financing a great home.

 

How to Reach Millenials

By Leo.Rosete@nafinc.com April 24, 2018

How Loan Officers Can Best Appeal to Millennials

For the third year in a row, millennials comprise the highest share of homebuyers in the U.S.1 As millennials continue to enter young adulthood and flood the housing market, New American Funding is dedicated to making sure its Loan Officers know exactly how they can best appeal to and work with this very unique generation.

New American Funding is here to serve the needs of its borrowers, and right now, many of those borrowers are millennials. We understand that when it comes to the mortgage loan process, millennials have varying preferences in how they select a lender as well as how they want to communicate with that lender. It is vital that Loan Officers shift their marketing and customer service strategies when working with this tech-savvy, inquisitive generation.

There are many steps Loan Officers can take to make millennials excited about working with them:

1. Educate, Educate, Educate

Millennials are the most educated generation in history. As a whole, they don't like jumping into things they don't understand, especially when they have grown up in a world where any information they seek is just a click away. Millennial homebuyers want to be informed, and Loan Officers who take the time to educate potential borrowers on the mortgage loan process are going to come out on top.

The best way to educate millennials is through online content. Millennials live for their screens, and whenever they have a question about something, they are going to Google it. These homebuyers are likely to become loyal to the lending brands they find online – particularly those that provide helpful guidance through articles, videos and how-tos before they have even become customers. Increase your focus on Search Engine Optimization and other digital marketing techniques so when millennials Google questions about mortgages, your page is the first thing they find.

Once potential customers have been turned into actual customers, make sure to continuously update them on every aspect of the process and walk them through anything they do not understand. Keep them in the know, and they will keep wanting to work with you.

2. Build a Social Media Presence

If you aren't on social media, you're already falling behind. Places like Instagram, Facebook, Twitter, YouTube and Pinterest are where you'll find millennials, who are out there searching for brands that will engage them. The more channels you join, the more customers you will reach. Just make sure you research the best way to leverage each social channel, as each one requires distinct marketing and engagement tactics.

Engagement is the key word here. Social media is not the place to obsessively advertise your products and services. Millennials are turned off by direct advertisements and become more loyal to brands that make them feel like they are part of a conversation. Social media is a place to offer more educational content and spark discussions about various industry-related topics. Loan Officers who establish themselves as engaging thought leaders on social media will appear trustworthy and like they truly care about these homebuyers' needs, not only about getting their business. This marketing technique will attract more millennial customers.

Because millennials came of age during the economic recession and witnessed their parents' immense financial struggles, many are wary of the home buying process and have difficulty trusting Loan Officers.2 These kinds of engagement tactics will encourage millennials to trust you. Transparency and warmth are keys. Millennials want to feel like they are interacting with human beings rather than faceless businesses.

"Loan Officers should give borrowers the option to electronically sign documents."

3. Invest in New Technology

Efficiency is a millennial buzzword. If they can't complete easy loan application tasks online, they may decide to find a lender who will allow them to do so. The more steps millennials can complete online, the happier they will be. Whenever possible, Loan Officers should give borrowers the option to electronically sign documents. Even more, they should be able to access a web portal that allows them to fill out their entire application online. If you want to improve your online services even more, offer online tools that help millennials calculate various costs based on their wants and needs.3

Millennials grew up with the Internet, so in their eyes these kinds of services are not extras. They are simply an expectation.

4. Text Them

Texting may feel unprofessional to someone in an older generation, but it is millennials' preferred method of communication. They will appreciate Loan Officers sending them a quick text when the information they need to provide is not substantial enough to necessitate a phone call. To millennials, texting is actually good customer service.

Millennials are a force in real estate, and at New American Funding, we are prepared to meet their needs.

Sources

1 National Association of Realtors 2016 Home Buyer and Seller Generational Trends Report
2 DataTree
3 Accenture