Myths Around Working with Lower-Income Buyers
Mortgage lenders and real estate agents play an important role in advancing homeownership equity. When it comes to this work, however, there are some persistent myths that can cause unfounded concerns when working with lower income buyers.
Here are the facts around five of the most common industry myths out there as gathered by the Homeownership Opportunity Alliance:
Myth #1: Transactions using down payment assistance are less likely to close successfully.
Reality: There’s no difference in the closing rate between transactions using down payment assistance and those not using this resource.
Myth #2: Processing transactions using down payment assistance takes too much time and effort.
Reality: Teams with the expertise onboard to quickly and efficiently process down payment assistance transactions have a larger and growing pool of potential business to draw from. Down payment assistance is becoming more and more common in transactions due to rising home prices and interest rates.
Myth #3: You can’t use more than one down payment assistance program in a single transaction.
Reality: Many down payment assistance programs can be combined, or layered, in a single transaction. Guidelines around this vary from program to program, and from institution to institution.
Myth #4: Working with lower-income households lowers my annual earnings.
Reality: Since lower-income households are one of the fastest-growing segments of the homebuyer market, there’s more business available at this level than any other. More transactions equals higher income.
Myth #5: Transactions using government loans such as FHA or VA are riskier for sellers than conventionally financed transactions.
Reality: Buyers approved for government loans are no riskier than those using conventional financing. Government loans do require a more stringent property appraisal process than conventional loans, but the required fixes to complete the sale are not likely to derail the transaction.
Additionally, from a practical standpoint, government loan buyers are a fast-growing segment of the market, and strong growth will likely continue as rising home prices and interest rates attract more and more buyers looking for a down payment they can afford.