Pathways to homeownership

by Garett Dickinson

HOMEOWNERSHIP IS ONE OF THE SOUNDEST INVESTMENTS someone can make in their lifetime. Owning a home can provide personal stability and offer a pathway to a happy and prosperous retirement. For many, however, the process may seem daunting or even insurmountable. The economy can exacerbate this, with interest rates, the job market and other factors playing an influential role. Fortunately, there are many loan options and lending professionals to help hopeful homebuyers during their journey. Loans such as FHA, USDA and VA options can assist borrowers with avenues that require low or even no down payment. There are also various local and state programs that offer down payment assistance, tax credits and more.

COMMON LOAN DEFINITIONS:

FHA: Federal Housing Administration insured and typically requires lower down payments with more flexible credit and income requirements than conventional loans.

VA: Department of Veterans Affairs guaranteed and for veterans, active-duty military, and some surviving spouses, often with no down payment and better terms than conventional loans.

USDA: A United States Department of Agriculture product for rural and suburban areas, typically requiring no down payment and having more favorable terms than conventional loans.

Conventional: A private lender product not insured by the government, typically requiring higher down payments (usually at least 5%) and stricter credit and income requirements.

Proper Preparation

Like so many things in life, home buying is a series of actions to be taken in the proper order, and preparation is vital. President of Animas Mountain Mortgage, Peter Pritchard, encourages prospective homebuyers to consolidate finances before applying for a loan.

“Having all your assets in one bank account makes things a lot easier,” he said. “It makes the whole process much less frustrating from a borrower’s perspective.”

Owner of Silver Mountain Mortgage, Rhonda Yarbrough, also mentioned the importance of preparing, adding that an initial consultation with a mortgage specialist can help point people in the right direction regarding important fundamentals like improving their credit score.

Options Galore

Common misconceptions are also essential to address for potential homebuyers. Yarbrough listed the fear of a large down payment as one of these concerns.

“So many people call me, and they are under the impression they always have to have a larger down payment, and that is definitely not the case,” she said.

She said there are a variety of loan products used to secure finances for borrowers and each with their own nuances. Mortgage professionals like Yarbrough and Pritchard compare these variables to determine the best option for their clients.

Yarbrough mentioned working with the Homesfund, a local program that helps those who qualify for assistance cover some of their down payment cost. “(The program) gets a lot of people into homes in this area,” she said.

Pritchard also noted the importance of HomesFund as a regional asset. “They create the opportunity to buy homes when that opportunity wouldn’t otherwise exist.”

Homesfund Heroes

HomesFund is a 501(c)3 nonprofit that serves the five counties of Southwest Colorado, including La Plata, Montezuma, San Juan, Archuleta and Dolores counties. Specializing exclusively in home purchase assistance, HomesFund helps low to moderate-income residents buy homes through education and financial aid.

After a free eight-hour primer on homeownership, the process moves to one-on-one counseling on pre-purchase and home ownership specifics. Then, qualifying prospects will move on to the actual down payment assistance.

Pam Moore, Deputy Director for HomesFund, noted that HomesFund has one of the most generous down payment assistance programs in Colorado.

“In La Plata County, a family making $78,450 or less could get up to $125,000 of down payment assistance from us,” she said.

Homesfund is also a CDFI, or Community Development Finance Institution, allowing the nonprofit to act as a bank with more of a social mission.

“So while we’re still following sound underwriting guidelines, we’re going to be filling gaps that banks just can’t fill,” Moore said.

A recent addition to the services that HomesFund provides is mobile home financing, offering even more products that banks don’t have.

“We know those properties are still an important piece of the affordable housing spectrum,” Moore said.

Welcome Home

“Once you have control over your housing costs and you can plant your roots, you can blossom,” Moore said while describing the deep satisfaction she gets from assisting others in becoming homeowners. “I’ve just seen time and time again that when families are able to move from renting to homeownership, they’re just setting themselves up for stability.”

Pritchard echoed the sentiment. “Over the years, I’ve had the opportunity of helping many, many people with their home purchases,” he said. “It’s very rewarding because I know that they’re gonna be in a better position 20, 30 years down the road.”

When you’re looking to buy a home, be sure to investigate all of the available resources. With the variety of loan products, programs like HomesFund, and professionals like Pritchard and Yarbrough, there is likely a viable option for you.