Your Guide to Buying a Home with Down Payment Assistant Programs

One-fifth of aspiring homeowners (20 percent) believe they'll never be able to save enough for a down payment, according to Bankrate's Down Payment Survey. However, you don't have to rely solely on savings to buy a home. There are numerous forms of down payment assistance available in varying amounts to help you bridge the gap. Here's a comprehensive guide to your options and how to qualify.

Understanding Down Payment Assistance (DPA) Programs

Down payment assistance (DPA) programs provide homebuyers with funds to help cover down payments and, in some cases, closing costs. While a few programs are available at the federal level or through individual mortgage lenders, most assistance is offered locally through state, county, and city government programs.

Eligibility Requirements for Down Payment Assistance

Most down payment assistance is designed for first-time homebuyers or those with lower to moderate incomes. A first-time homebuyer is defined as someone who hasn't owned a home in the past three years. These programs are specifically for primary residences, not investment or rental properties. Depending on the program, eligible properties might include single-family homes, condos, townhomes, homes in planned unit developments (PUDs), or multifamily properties up to four units, provided you live in one of the units.

Eligibility typically requires:

• Meeting income thresholds, often based on the area median income (AMI).
• Purchasing a home in specific counties or cities.
• Having specific backgrounds, such as working in public service professions.
• Qualifying for a 30-year, fixed-rate first mortgage, sometimes limited to certain types of mortgages like government-backed loans.
• Partnering with an HFA's lender if using state housing finance agency assistance.

Additional requirements may include meeting credit score minimums, contributing personal savings to the home purchase, and completing a homebuyer education course before closing.

Types of Down Payment Assistance Programs

Grants:
Grants provide a one-time cash sum, often as a no-interest second mortgage, that doesn't have to be repaid. These funds can cover all or part of a down payment or closing costs.

Forgivable Loans:
These are second mortgages that function as grants if you meet certain requirements, such as timely mortgage payments and residing in the home for a set period (typically three to ten years). If you move before the period ends, you must repay the loan prorated based on your time in the home.

Low-Interest Loans:
These second mortgages come with affordable interest rates. You'll repay the loan over a few years along with your primary mortgage, covering the down payment assistance amount plus interest.

Deferred-Payment Loans:
These loans don't charge interest, and you'll repay the assistance when the loan term ends, you move, or you refinance your first mortgage.

Individual Development Accounts (IDAs):
IDAs are matched savings accounts where your contributions are matched by private or public funds. They usually have strict income caps and employment requirements and often require financial literacy training. These accounts can be used for down payments and closing costs.

Lender Down Payment Assistance Programs:
Some mortgage lenders offer down payment assistance to eligible borrowers, often in the form of grants or matched savings opportunities. Examples include Bank of America, Chase, and Wells Fargo. To qualify, you'll need to obtain your mortgage from that lender, which might affect the interest rate.

Finding Down Payment Assistance

State Housing Finance Agency (HFA):
Every state has an HFA that assists homeowners and renters. Contact your state's HFA or visit its website to explore available down payment assistance options.

City or County Website:
Many counties and cities offer down payment assistance. Check your municipality's website for information.

HUD:
The U.S. Department of Housing and Urban Development (HUD) website provides a list of local homebuying programs by state.

Your Lender:
Your loan officer can guide you to appropriate assistance programs.

Down Payment Resource:
This private company offers resources for homebuyers, real estate agents, and lenders, including an eligibility and assistance lookup tool.

By leveraging these resources, you can find the right down payment assistance program to help you achieve homeownership, easing the financial burden of your down payment.

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Prepare Your Home for Summer: DIY Tips and When to Call the Pros

As summer approaches, ensuring your home is ready for the season is essential for both comfort and safety. While some home maintenance projects can be costly, there are several you can tackle yourself to save money and still get your home summer-ready. Here's a guide to help you decide which tasks you can DIY and which ones are best left to professionals.

DIY Tasks to Prepare Your Home for Summer

Seal Windows and Doors Drafts can let your cool air conditioning escape, compromising your comfort and increasing your energy bills. Use weather stripping, caulk, and draft stoppers to seal windows and doors. These easy and renter-friendly DIY tasks can improve your home's energy efficiency and keep cool air inside during hot months.

Set Up an Air Purifier and Change Air Filters Air quality is important year-round, but warm temperatures often bring increased pollutants like pollen and particulate matter. Air purifiers can capture these pollutants, allowing you to breathe easier. For optimal protection, consider a UV air purifier that eliminates harmful particles such as pathogens, bacteria, pet dander, and dust. Also, remember to change air filters in your air conditioners and HVAC systems regularly.

Maintain Your Lawn and Garden Regular mowing, weeding, and watering can keep your lawn and garden vibrant throughout summer. Planting drought-resistant plants and using mulch can reduce water usage and maintenance time. Installing a rain barrel can help conserve water while keeping your garden hydrated. Check with your local government for rebate programs on water-saving technologies.

Install a Smart Thermostat A smart thermostat helps keep your HVAC system running efficiently and reduces energy costs. Like a programmable thermostat, a smart thermostat allows you to schedule temperature changes for convenience. With added sensors and Wi-Fi connectivity, you can control the thermostat remotely, optimizing temperatures and reducing stress on your system.

Tasks Best Left to the Experts

Tune Up Your HVAC System Your HVAC system is crucial for maintaining a comfortable indoor temperature. A yearly professional tune-up ensures the system runs efficiently and helps prevent costly breakdowns. Poorly handled HVAC tune-ups can lead to lost efficiency and increased costs, and an amateur job poses a serious risk of injury. Trust a professional to clean ducts, check for refrigerant leaks, and ensure all components are in good working order.

Trim and Remove Trees Large tree limbs can become hazardous during summer storms, posing a risk to your home and its occupants. Professionals have the equipment and expertise to safely trim or remove trees without endangering themselves or your property.

Inspect and Repair the Roof A professional inspection can identify potential issues like loose shingles, leaks, or structural damage. Experts have the tools and knowledge to conduct repairs safely and ensure your roof can withstand summer storms.

Clean the Gutters Keeping your gutters clean is essential to prevent water damage. However, this task can be dangerous. According to the CDC, more than 500,000 people are treated for ladder-related injuries each year, with about 300 fatalities. Given the potential risk, it is highly recommended to enlist professionals for gutter cleaning.

Preparing your home for summer can be manageable and cost-effective if you know which tasks to DIY and which to delegate to professionals. Use these tips to ensure your home is safe and comfortable all season long.

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The Importance of Quality in Home Décor

Home décor has been enjoying the spotlight for the past five years. With social media trends providing endless inspiration, it's tempting to click "add to cart" on a kitchen sink you've never seen in person. However, impulse purchases based solely on aesthetics often lead to disappointment, and hasty renovation decisions can ultimately reduce your home's resale value.

Margaret Donaldson, founder of Charleston, South Carolina-based MDI Luxury Design, advises her clients to compare products in person. "They sometimes talk themselves into less expensive knock-off finishes without seeing the difference in the quality item first," she notes. Professionals like Donaldson recommend visiting a showroom such as Ferguson Bath, Kitchen & Lighting Gallery. Experiencing the products you plan to live with daily is far better than scrolling through blurry thumbnails on a screen.

The Showroom Experience

Stepping inside a Ferguson showroom is an immersive experience that allows you to touch, feel, and understand the difference quality makes. When you book an appointment, an industry-expert representative will assist you every step of the way, from in-store selection and personalized recommendations to delivery coordination.

"At the end of the day, quality finishes hold up better over time, are best for resale, and tend to be more beautiful," says Gideon Mendelson, founder and creative director at New York-based Mendelson Group. To ensure you're enhancing both your interiors and your equity, pair a trip to the showroom with the following expert tips.

Budget for Quality Materials

According to contractor marketplace Sweeten, the national average cost of a full bathroom renovation in 2024 ranges from $16,000 to $31,000. Much of that variance comes from the quality of fixtures, which can cost anywhere from $1,500 to over $15,000. "Labor costs are often relatively fixed, but an extra investment in quality materials is the best use of budget to ensure an outcome that transcends trends and creates timeless beauty," says New Jersey-based interior designer and gallerist James Yarosh.

If budget is a concern, retailers like Ferguson offer a wide variety of price points without compromising on integrity. "Custom often means costly. If you can stick to standard-size finishes and fixtures, you can often find savings there," adds Sweeten's senior director of operations, Katherine Jones.

Factor Durability into the Investment

High-quality finishes stand the test of time better than budget-friendly counterparts, which translates to cost savings due to fewer repairs and replacements. "Quality materials, construction, and craftsmanship can better withstand wear and tear," says David Mann, president of MR Architecture + Decor in New York City.

These savings benefit future homeowners as well. "Anything that can be refinished rather than replaced is a value-add," points out Dan Mazzarini, bicoastal principal and creative director of BHDM Design and Archive. Think of a thick marble countertop or solid wood floors versus engineered materials that wear poorly over time.

Stay True to Your Design Vision

Prioritizing quality doesn't mean sacrificing your vision. "We advise clients to buy timeless pieces that bring them joy," Mendelson says. "It's important to keep both livability and longevity in mind when shopping for a home renovation. I want to create places and spaces that make a family's life easier, more interesting, more relaxing, and more fun."

Donaldson agrees, emphasizing the importance of considering the client's lifestyle. "Quality products can outperform inferior products in durability and classic aesthetics," she says. Ferguson's in-house industry experts are ready to help you stay true to your vision while staying on budget with professional recommendations tailored to your unique needs.

Don't Overlook the Details—Big and Small

The foundational elements of your home—the ones most difficult to change—are where it makes the most sense to invest. Yarosh recommends upgrading to top-notch materials when changing the bones of a house, such as millwork, flooring, mantels, kitchen and bath fixtures, countertops, and tiles. High-end appliances like French-door refrigerators and built-in ovens give a kitchen a sophisticated, curated look. "Small details go a long way, like great hardware and light switches," adds Mazzarini. "These are often afterthoughts for many homeowners, but when they're in place, people see the value they create. It also builds confidence in the overall infrastructure of the home."

Lighting, hardware, and plumbing fixtures may seem small, but they're elements in your home that you interact with every day. Whether you're working on a new build or upgrading your space, quality should be of the utmost importance. Book an appointment with your local Ferguson showroom to get the in-person experience you need to choose what's right for your home.

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Understanding Home Market Value vs. Rebuild Value in Homeowner Insurance

When discussing homeowner insurance, you might encounter unfamiliar terms such as home market value and rebuild value. Understanding the difference between these terms is crucial for adequately protecting your property.

Market Value vs. Rebuild Value: What Do They Mean?

The market value of your house is the price it would fetch in today's real estate market. This is the amount you would pay to purchase the home or what you would ask for if you were selling it. Conversely, the rebuild value is the cost to reconstruct your home from scratch if it were destroyed.

The rebuild value can often be higher than the market value. This discrepancy arises because rebuilding a home involves additional costs such as demolition of the existing structure, individual labor, and supplies which are not purchased in bulk like they are during the construction of a whole neighborhood. Furthermore, inflation can increase the cost of materials needed for repairs.

Why Rebuild Value is Important for Insurance

While both market value and rebuild value may come up during the homeowner insurance policy process, the coverage amount on your insurance policy is generally based on the rebuild value. This approach ensures that you can fully restore your home in the event of a total loss covered by your policy.

It's important to note that land value is not included in the rebuild cost because the land itself isn't rebuilt or insured. However, market value does reflect land value, as it considers the location, size, and specifics of the land.

Calculating the Cost to Rebuild

Insurance companies use sophisticated tools to calculate the rebuild value, factoring in location, construction quality, square footage, and the cost of supplies and labor. Rebuilding also takes time, and costs can vary significantly based on location and the nature of the rebuild. For instance, after the 2017 wildfires in Northern California, rebuilds took between 12 and 24 months, with costs ranging from $160 to $800 per square foot depending on the home's standards and location.

Ensuring Adequate Coverage

It is essential to keep your insurance company informed about any updates or additions to your home, especially those that increase square footage or add significant value. This ensures that your insurance policy reflects the updated rebuild value, protecting you from being underinsured.

At Armed Forces Insurance (AFI), our experienced agents can help you determine if your homeowner coverage amount is adequate to protect your family and future. We are dedicated to serving you throughout your time in your home and beyond.

About Armed Forces Insurance

Armed Forces Insurance has been a trusted advisor to American armed forces service members and veterans for over 135 years. Based near Fort Leavenworth in Kansas, we pride ourselves on providing personalized service and straightforward advice. If you're looking for someone you can trust to protect your home and property, visit our homeowner insurance page to learn more.

 

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Real Estate Tops List of Long-Term Investment Choices for Americans

Real estate continues to be Americans' preferred long-term investment, according to Gallup's annual economy and personal finance survey.

In the survey conducted in April, 36% of respondents chose real estate as their top investment choice, a figure consistent with last year. Stocks or mutual funds were the second most popular choice at 22%, followed by gold at 18%, and savings accounts or certificates of deposit at 13%.

Bonds and cryptocurrency lagged far behind, with only 4% and 3% of respondents, respectively, naming them as the best long-term investments.

Gallup attributed the high ranking of real estate and stocks to their recent strong performance. Although U.S. real estate values have dipped from their peak in the fourth quarter of 2022, they remain significantly above early 2021 levels. Stock values have also hit new highs this year.

Since 2014, real estate has consistently been the top choice, with 30% to 45% of respondents selecting it each year. In 2013, real estate tied with gold and stocks for first place; in the previous two years, it trailed gold.

Americans' preference for real estate aligns with their expectations of rising local home values, according to the report.

Income and Political Differences

The survey revealed that Americans at all income levels view real estate as the best investment, but their preferences for other investments vary by income and political affiliation.

Among upper-income Americans (incomes of at least $100,000), 31% named stocks as the best investment, compared to 14% of lower-income Americans (incomes of less than $40,000). Lower-income respondents favored gold (23%) and savings accounts (20%) more than their upper-income counterparts, of whom only 7% considered savings accounts the best investment.

Political affiliation also influenced investment preferences, particularly regarding gold. Twenty-seven percent of Republicans chose gold as the best investment, compared to 7% of Democrats and 18% of independents. Last year, 38% of Republicans named gold as their top choice, versus 12% of Democrats and 27% of independents.

Since 2013, Republicans have consistently been more likely than Democrats to view gold as the best investment. This gap has widened significantly since 2020. Over the past five years, Republicans have also increasingly diverged from independents in their views on gold.

Most subgroups are now more likely than a year ago to favor stocks as the best investment and less likely to favor gold. The notable exception is respondents aged 55 and older, whose opinions have remained unchanged.

Stock Ownership Remains High

The survey found that 62% of U.S. adults have money invested in the stock market, through individual stocks, stock mutual funds, or retirement savings accounts. This percentage is essentially unchanged from last year and marks a return to pre-2008 recession levels when 60% or more Americans owned stock.

Stock values reaching record levels earlier this year likely contribute to the increased preference for stocks as a top investment choice. Stock ownership is highly correlated with income: 87% of upper-income Americans own stock, compared to 25% of lower-income Americans and 65% of middle-income Americans (incomes between $40,000 and $100,000).

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Single-Family Built-for-Rent Construction Sees Significant Growth in Early 2024

Single-family built-for-rent (SFBFR) construction saw substantial year-over-year gains in the first quarter of 2024, as builders aimed to increase rental housing options in a market burdened by high mortgage interest rates.

According to the National Association of Home Builders (NAHB), which analyzed data from the Census Bureau's Quarterly Starts and Completions by Purpose and Design, there were approximately 18,000 SFBFR starts in the first quarter of 2024. This figure represents a 20% increase compared to the first quarter of 2023, though it's worth noting that the comparison benefits from a particularly weak start in 2023. Over the past four quarters, 80,000 such homes began construction, marking a nearly 16% rise from the 69,000 SFBFR starts in the previous four quarters.

The SFBFR market provides much-needed inventory amid ongoing challenges related to housing affordability and down payment requirements in the for-sale market. This is particularly relevant as more people seek additional space and prefer single-family structures. SFBFR homes often have different structural characteristics compared to other newly built single-family homes, especially regarding size.

Despite a cooling investor demand for both existing and new single-family homes due to higher interest rates, builders continue to pursue smaller SFBFR projects for their own operations. Given the affordability issues in the for-sale market, the SFBFR sector is expected to maintain a significant market share, even if the sector experiences some cooling in the upcoming quarters.

 

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How to Secure a Low Mortgage Rate in a Challenging Market

Scoring a low mortgage rate is crucial for many potential homebuyers, especially as homeownership becomes increasingly difficult to attain. According to the Mortgage Bankers Association (MBA), mortgage applications decreased by 2.3% for the week ending April 26, 2024.

"Inflation remains stubbornly high, which is convincing markets that rates, including mortgage rates, will stay higher for longer," said Mike Fratantoni, MBA's SVP and Chief Economist. "This is a significant challenge for the housing and mortgage markets, with the 30-year fixed mortgage rate rising to 7.29% last week, the highest level since November 2023."

High mortgage rates are pushing buyers out of the market and causing some to back out of deals. Home purchase cancellation rates hit 16.3% in September 2023, the highest since October 2022, according to Redfin. It remains a tough market for first-time buyers, says Ralph DiBugnara, a senior vice president at Cardinal Financial.

"I'm seeing some buyers pull out of the market because they can no longer afford a home loan," DiBugnara explains. "I'm also seeing more people getting cosigners and lowering their price range."

Many buyers are reassessing whether it's the right time to purchase a home. "A lot of buyers have moved to the sidelines and are taking a wait-and-see approach due to mortgage rate increases," says Bill Gassett, a real estate agent with Re/Max in Hopkinton, Mass.

Tips for Securing a Low Mortgage Rate

If you're looking to purchase a home in this market, these steps can help you secure a lower mortgage rate.

1. Increase Your Down Payment

To qualify for the lowest rates on a conventional loan backed by Fannie Mae or Freddie Mac, you'll need a 20% down payment, says Melissa Cohn, a regional vice president at William Raveis Mortgage. "The bigger your down payment, the better the rate," Cohn advises.

If you need help with a larger down payment, consider national and local down payment assistance programs. You can research eligibility for these programs at DownPaymentResource.com.

2. Raise Your Credit Score

To be eligible for the lowest mortgage rates on a conforming loan, you generally need a FICO score of 760 or higher, says John Ulzheimer, a credit expert. Raising your credit score by 20 points can potentially save you thousands on your mortgage.

You can get a free credit score estimate through your bank or credit card issuer, or from websites like Credit Sesame or Credit Karma. If your credit score needs improvement, steps such as paying down credit card debts can boost your score quickly.

"Paying down some of your credit card debts can yield a higher FICO score in as little as two weeks," says Ulzheimer. A good rule of thumb is to keep your credit utilization ratio below 30%.

Check for errors on your credit report as well. "Make sure all the information on your report actually belongs to you," advises Ulzheimer. "Identity theft can result in someone opening a credit card in your name and accumulating significant debt."

3. Shop Around

Nearly half of consumers get only a single quote when applying for a mortgage, according to the Consumer Financial Protection Bureau. Shopping around can help you find a lower rate.

Get quotes from at least three lenders. Local lenders and credit unions often offer lower rates than big banks. You can also consider online lenders such as Rocket Mortgage. "You may get a different quote from each lender you speak to," says Kushi.

A study by Freddie Mac found that borrowers who received two rate quotes during the high-interest months of October and November 2022 could have saved $600 annually. Borrowers who received at least four quotes could have saved more than $1,200 annually.

4. Consider an Adjustable-Rate Mortgage

Adjustable-rate mortgages (ARMs) developed a bad reputation after the 2008 housing market crash, but today's ARMs have more protections. An ARM starts at a lower interest rate than a fixed-rate mortgage and adjusts based on market indexes after a specified period.

"I like adjustable-rate mortgages when borrowers understand them," says DiBugnara. "If you have an exit strategy, an ARM can be a great product." For instance, if you plan to sell your home in the next four years, a five-year ARM can save you thousands in interest.

A Redfin report from May 2022 noted that the typical homebuyer would save an average of $15,582 over five years by choosing a five-year ARM instead of a 30-year fixed-rate mortgage.

5. Lock in the Best Rate

If you qualify for a great interest rate, a mortgage rate lock allows you to secure it for a set period, typically 30, 45, or 60 days, from the time you receive a conditional loan offer to when you close on a home.

Many lenders offer a free 60-day rate lock, but you usually have to request it, says Jacob Channel, senior economist at LendingTree. However, if your financial status changes before you close on a home, your rate can still change.

Channel suggests buyers consider a "float-down" rate lock, which allows you to get a lower rate if interest rates fall. Lenders often charge a fee of 0.5% to 1% of the total mortgage amount for a float-down lock.

"There's always some risk in getting a rate lock," says Channel. "But a rate lock can also pay for itself, especially in an environment where rates are rapidly rising."

By following these steps, you can improve your chances of securing a lower mortgage rate in today's challenging market.

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