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By Steve cook
Managing editor
real estate economy Watch
Find Assistance Where It’s Needed
downpayment-assistance programs may lead to more closed deals
According to a national home- buyer survey conducted by Move Inc. this past november, about
27 percent of all Americans still plan on
buying a home in the future, yet only
2 percent of them plan to purchase in the
next 12 months. The cause of this hesitation? More than half of those planning to
buy in two years or more said that they’re
waiting in part because they lack the
money to make a downpayment or pay
for a deal’s closing costs.
Homebuyers taking out a mortgage
today make an average downpayment of about 12 percent, according
to a recent report from Lending Tree.
With 5 percent added to that for closing costs — and considering 2011’s
median home sales price of about
$166,000 — buyers typically need
more than $25,000 in cash to close.
To raise that kind of money, many
people have to save and sacrifice
for years, especially first-time buyers who have no equity from a house
they’re selling.
What many homebuyers don’t realize,
however, is that there are a number of
downpayment-assistance programs that
may be available to them. Many real
estate agents aren’t aware of these
programs either, so it’s largely up to
mortgage brokers and originators to
keep their clients properly informed.
Keeping yourself well-educated about
available downpayment-assistance
programs ultimately may help you close
more deals — and close them more
quickly, as well.
state and local housing authorities and
nonprofit organizations. Overall, housing finance agencies have financed
about 4 million mortgages for low- and
moderate-income households, yet
many homebuyers still are unaware of
their options in this regard.
Although many active listings may
qualify for downpayment-assistance
programs, eligibility will be limited by
income and cost, which vary by program and location. Regardless of the
specifics, however, it’s safe to say that
millions of dollars’ worth of grants and
low-cost loans for downpayment assistance go begging each year simply
because many buyers and real estate
agents don’t know about them. With
that in mind, mortgage professionals
can do their part and keep potential
homebuyers informed of these important programs.
FirstHome program from the Iowa Finance
Authority (IFA) is typical of the programs
available in virtually every state. Although
IFA is not a direct lender, it offers a safe
and affordable fixed-rate mortgage that’s
underwritten by a local lender.
The program offers as much as $2,500
in cash assistance to help certain borrowers with their downpayment, closing
costs or minor expenses. In addition, military service members and veterans can
be eligible for a $5,000 grant, which can
be used for downpayment and closing-cost assistance, as well.
IFA’s program serves as a good example of what may be available in your
own area, but brokers and originators
still should carefully review the programs
continued on page 46 »
Background
As lending standards tightened in the
past six years, downpayment requirements have increased. Still, the average downpayment is not as high as it
was 20 years ago, due to the prevalence
of financing from the Federal Housing
Administration (FHA), which accounts for
the bulk of first-time buyers’ purchases.
Of those first-time buyers, surprisingly
few take advantage of downpayment-assistance programs available through
databases
Although available programs will vary
depending on your location, the
Steve cook is managing editor of Real Estate
Economy Watch and UPI Real Estate, Web-based news sites covering the residential
real estate marketplace for professionals
and consumers. Real Estate Economy Watch
was recognized as one of the best real estate
news sites by the national Association of
Real Estate Editors. Cook also provides
communications-consulting services and was
vice president of public affairs at the national
Association of Realtors. Reach him at scook@
commsconsulting.com.
By Steven driss
president
Lifeline employee Benefits
Lock in More Protection
Key-person disability insurance may shield your business
Given the discrepancy between a
person’s perceived risk and a person’s
actual risk, adequately preparing your
company for sudden disabilities may
be more important than you realize.
Mortgage brokers and origina- tors certainly know the value of business relationships.
They form referral relationships with
Realtors, certified public accountants
(CPAs) and financial planners; business
relationships with title and escrow companies; and perhaps most important,
professional relationships with clients.
Each of these relationships is necessary in its own way — CPAs and Realtors
may provide referrals, and the rewards
of building lasting relationships with clients are limitless. All things considered,
there are few other industries that rely
as heavily on networking and relationships as the mortgage industry does.
Yet in spite of how important professional relationships are to the success
of brokers and originators, it still can be
easy to overlook exactly how much you
depend on the others around you.
Consider, for instance, how much
your daily professional life depends
on your company’s office managers,
processors and underwriters, among
others. What would happen to your
business if one of these people be-
comes unable to work? In other words,
how profoundly could your business
be affected by an employee becoming
disabled?
a review
Failing to consider the potential impact of disability isn’t because of
irresponsibility or shortsightedness.
To a large extent, people simply perceive disability as something that
won’t happen to them or those around
them. In fact, according to the Council
for Disability Awareness, 64 percent
of workers think that they have a 2
percent or less chance of becoming
disabled for three months or more at
some point in their careers.
These numbers indicate that most
people — mortgage professionals included — don’t believe that they live
particularly risky lives. Even if your
health is less than perfect, you still
may not expect to become disabled
to the extent that you can’t work.
Unfortunately, however, statistics indicate that the likelihood of becoming
disabled may be greater than some
people think. According to the Council
for Disability Awareness and the
Social Security Administration, for instance, employees entering the work-force today have about a 30 percent
chance of becoming disabled during
their careers.
continued on page 46 »
The specifics
Although your company already may
have certain policies that provide
some coverage in the event of unforeseen personnel disabilities, key-person disability insurance differs from
other types of disability insurance in
that it’s much more comprehensive.
Further, key-person disability insurance
is custom-designed to fit a company’s
specific needs; in other words, it’s not
simply a blanket disability policy.
For mortgage companies, there are
two options for reimbursement when
it comes to key-person disability
Steven driss is president of Lifeline
Employee Benefits in Tarzana, Calif. Lifeline
Employee Benefits was established in 1985
to help individuals and small businesses
identify and purchase affordable health
insurance, disability and group insurance.
For additional information, visit health-quotes.net or contact Driss at (818) 774-
1003 or steve@health-quotes.net.
