Spotlight on Mortgages 

Written by Nicole Rueth 10/4/2023

Member of the DMAR Market Trends Committee and Local Mortgage Expert at The Rueth Team

Nicole Rueth, a local mortgage and market expert writes:

October 2023 presents an incredible opportunity for first-time homebuyers to make their move. Yes, headlines are screaming inflation, higher mortgage rates and a slowing market, but amidst the dissonance, the opportunities are hiding in plain view.

The State of the Market
Over the past seven months, inventory has been steadily increasing, which means more options for buyers. Yet, demand is softening. In classic Economics 101, more supply and less demand should lead to price declines. However, in our current market, home prices continue to gently climb. This dichotomy creates a sweet spot for first-time buyers; they have the luxury to be a bit picky, negotiate seller concessions and avoid bidding wars at every corner. Inevitably, when mortgage
rates drop, guess what happens? A flood of new homebuyers will enter the market and home prices will skyrocket. Those of us in the industry are aware of this phenomenon but do our first-time homebuyers know?

Below are four loan options that a first-time homebuyer (FTHB) can use to capitalize on this market, right now:

FHA Loans: Ideal for those with lower credit scores and smaller down
payments, requiring a minimum of 3.5 percent down. FHA loans have lower interest rates than conventional. FHA’s biggest win is allowing up to a 55 percent debt-to-income ratio. Borrowers can also add a co-signer, include side gig income and get a gift from family and friends to help qualify. The downside is lifetime mortgage insurance.

VA Loans: A godsend for our veterans, active and reservists. Zero down payment on one to four units and does not require private mortgage insurance (PMI). It’s a win-win! 

3 Percent Down Conventional Loans: Clients with stronger credit can enjoy the benefits of conventional lending with a three percent down option. If income is under 120 percent of the Area Median Income (AMI), all loan level price adjustments are waived, yielding a lower interest rate and mortgage insurance payment. Additionally, conventional loans offer flexible PMI options, giving buyers options to lower their monthly payments.

Down Payment Assistance (DPA) Programs: Did you know there are 29 DPA programs in Colorado alone? Now that’s options! The DPA program provides grants and silent seconds, permits for non-occupant co-borrowers and does not adjust rates for lower credit scores. Multiple DPA programs can even be
combined to provide more funds.

As always, if we can be of service in any way to you or someone you love please let us know!