Securing the Keys to Homeownership

Millennials have over $1 trillion in debt, the most of any generation in United States history. They’ve also had to work towards financial stability in an economy that has grown slower than any previous generation. The last “golden-era” of economic growth in the United States, the 1990s, saw high job creation and low inflation levels, two indicators of a thriving economy. When you compare baby boomers in their thirties to millennials of the same age, boomers owned eight times as much real estate value as millennials. Rising student debt and stagnant income levels are some of the factors that have made buying and keeping a home seem unattainable. The economic impact of Covid-19 has only reaffirmed that view for many.

However, a home is more than just a place to live; it’s also a valuable asset to your financial portfolio. When the economy is going well, home values usually increase between 3-4% per year. You can then cash in on it later by selling your house for more than you paid or borrow against it at a lower interest rate than most credit cards. Furthermore, you will get income tax breaks for the mortgage interest and property tax you pay each year. Owning a home gives you more financial freedom in both the short and long term to pursue the things you want in your everyday life.

Support for Prospective Homebuyers

As a rule of thumb, start your search for programs offered by the local and federal government, specific vocations (military, nurses, etc.), and different family structures.

  • Michigan State Housing Development Authority (MSHDA) offers up to $7,500 in down payment assistance for first-time buyers (MI and repeat buyers (MI Home Flex).
  • GreenPath has partnered with Freddie Mac to create the BorrowSmart Program, a down-payment incentive program to allow prospective homebuyers to receive additional education while moving toward a home purchase.

It can be hard to know which options best fit your situation and which information to trust. By working with realtors, loan originators, and financial counselors like Greenpath, you can compile a more exhaustive list of options that might even enable you to utilize several different programs at once.

Support for Existing Homeowners

Many mortgage lenders are offering financial remedies to borrowers during the pandemic. The assistance provided is usually either forbearance or deferment. The difference between the two is generally how interest accrues and how those paused payments are paid back. For example, Under the CARES act, any homeowner with a federally backed mortgage (i.e., FHA, VA, USDA, Fannie Mae, or Freddie Mac) is potentially eligible for an initial forbearance up to 180 days. Often, taxes, insurance, etc., must still be paid with either option.

There are also options for nontraditional homeowners. If you’re in a more stable financial position, refinancing your home at a lower interest might offer an opportunity to save thousands of dollars. If that’s a path you look into, be sure to consider your new rate and term, plus your closing costs to ensure the dollars make sense for you.

Even the most common form of assistance available comes with many terms, implications, and decisions. Contact your loan servicer, and a qualified counselor, like GreenPath Financial Wellness, to assess how the remedies will impact your short and long term financial outlook.

Honest conversations with loan servicers and realtors about your financial situation are often stressful and maybe even embarrassing. Still, these tough conversations are the best way to start down a path of financial remedy. They know, and in many cases, the authority to present solutions to seemingly unfixable problems.

Additionally, new federal and state programs aimed at offsetting income lost due to the pandemic could help you keep up with your mortgage payment. Benefits.gov, 211.org, and Sba.gov are great places to start looking.

  • For example, 1099 contractors and part-time employees now also qualify for unemployment benefits in Michigan.
  • The Small Business Administration (SBA) has several loan programs, grant programs, and resources available to assist eligible small businesses.

And as always, be wary of fixes such as debt consolidation, payday loans, etc. They often end up being more stressful and costly than the original bills you sought to pay down.

Milestones such as buying a house or keeping up with the mortgage payments are undeniably more difficult because of COVID-19, but thankfully there are real, attainable solutions to many of the genuine issues that are hitting many of us just a little too close to home. Visit https://www.greenpath.com/housing/ for more information.

 

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