Mortgage standards ease up, and lenders loosen their lending requirements, as banks Wells Fargo, TD Bank, and Bank of America offer loans with down payments as low as 5 percent.
Lender TD Bank – driver of the “Right Step” initiative – is only requiring burrowers to be responsible for 3 percent, and moreover, not requiring home buyers to put down any cash down if supplied by a relative or third-party organization. Locally, Arlington Community Federal Credit Union will be accepting 3 percent down payments on mortgages up to $417,000 come late May of 2014.
This type of lending easing signals confidence in the housing market and may be a sign for those seeking to refinance old mortgages. Not only does these incentive current homeowners, but also drives banks to compete for origination fees – further spurring this large industry segment in a domestic economic recovery.
Banks didn’t always offer this type of low down payment lending. If a homebuyer was looking for a loan with a low down payment, say of 3.5%, they would turn to the Federal Housing Administration (FHA). But after issuing so many mortgages, the FHA eventually depleted reserves, and as a result, has been pressured to increase their costs – making private lenders and insurance all that more appealing.
Credit still plays a major part in qualification, with private lenders seeking scores anywhere above 755 and the government-supported FHA raising their credit requirement to 684. Some smaller lenders are even loosening their credit requirements to as low as 679 to compete in the first-time homebuyer market. This makes owning a new home much more feasible for those in the 25-34 year old, millennial segment.
Both the easing of down payment and credit requirements should not only manifest an increase in options for those looking for homes in the $150K – $450K range in the Washington, DC-metro area, but also more flexibility and opportunity for agents to display a variety of properties in the region. It’ll be critically important for these future homeowners to choose an agent who will find them a place they can call home for the next 15-30 years, and who can be there to help them with future sales or purchases as the economy slowly recovers.
Below are our latest properties in Alexandria between $150K – $450K
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