Secure up to $10,000 Free Money with the New ‘Parent’ Program for potential Home Buyers. Here’s How!

Zillow Home Loans is encouraging home buyers to find their dream home with their 1% down payment program! Image from https://www.pacifickitchens.com/wp-content/uploads/2016/09/iStock_4784790_MEDIUM.jpg

Zillow offers up to $10,000 in free money for eligible prospective home buyers!

With the rising prices of rents and mortgages, securing your dream home is even more difficult than it needs to be. Zillow Home Loans acknowledges this and announces their 1% down payment program. Get up to $10,000 in free money!

To help qualified house buyers put as little as 1% down on their subsequent home purchase, Zillow House Loans unveiled its 1% down payment program. According to Zillow’s Press Releases from August, this project is intended for properties located in Arizona, but there are plans for expansion to additional markets. With the help of Zillow Home Loans’ 2% closing contribution, they envision qualified borrowers saving just 1% of the total down payment.

The real estate portal reports that “typical asking rent nationwide is $2,062, or 3.6% higher than one year ago and up 31 percent since the start of the pandemic.”

The U.S. Sun, demonstrated how Zillow’s program would likely work. A buyer who earns 80% of the area’s median income and saves 5% would only need 11 months to save for a down payment under the 1% down payment program, based on the example of a $275,000 property in Phoenix. The grant offered to the homebuyer at this price would be $5,500.

In comparison, it would take them 2.5 years without the program to save 3% of the purchase price.

Orphe Divounguy, Zillow Home Loan’s senior macroeconomist, offered a statement in the press release.

“For those who can afford higher rent payments but have been held back by the upfront costs associated with homeownership, down payment assistance can help to lower the barrier to entry and make the dream of owning a home a reality,” said Divounguy, “The rapid rise in rents and home values means many renters who are already paying high monthly housing costs may not have enough saved up for a large down payment, and these types of programs are welcome innovations in lowering the potential barriers to homeownership for those who qualify.”

Currently, the program is only available to houses in Arizona. But for those looking to buy a home within the year, Zillow Home Loans urges them to take steps to research and prepare. Among these steps are: understanding your credit profile; improving your credit score; avoiding closing accounts; holding off on financing large new purchases; and determining what affordability looks like. The details of these steps are written down in their press release for homeowners looking for a good start.

However, a home-buying consultant might still be the best option for some homebuyers to know if this program is really the right path to go for them.

The housing market is poisoned by high interest rates that are toxic to both buyers and sellers

For the first time since 2000, the average 30-year fixed mortgage rate reached 8%, placing the cost of financing homes at an all-time high. With this increase, the current housing market is filled with high mortgage rates, high prices, a lack of inventory, and an oddly robust pent-up demand. According to recent research by the real estate company Redfin, which looked at median monthly mortgage payments in August 2023 and August 2022, homebuyers need to earn $114,627 to be able to purchase a median-priced property in the U.S. given high prices and high interest rates.

If the homebuyer spends no more than 30% of their income on housing, a monthly mortgage payment is within their means. The average interest rate on a 30-year fixed mortgage was 7.07% at the time of the research. According to Redfin, the median American household income in 2022 was $75,000. According to the real estate company, while hourly salaries in the U.S. have increased by 5% over the past year, this growth has not kept up with growing housing expenses.

Additionally, according to ICE Mortgage Technology, and recently acquired mortgage data provider Black Knight, with the average 30-year fixed rate loan currently at 7.63%, it now requires a monthly principal and interest payment of $2,528 to afford a median-priced home with a 20% down payment. Further, ICE said it is a 91% rise from two years ago and a monthly increase of $1,204. The average monthly payment on a property costs 40% of the median household income, making housing the least affordable it has been since 1984.

“Longer-term Treasury yields—which mortgage rates tend to follow—depend on expected economic growth and inflation expectations,” said Orphe Divounguy, senior economist at Zillow. “Inflation expectations are moving higher. Political dysfunction in the nation’s capital and rising government borrowing are also likely contributing to the increased pressure on yields.”

On CNBC’s “The Exchange” on Thursday, Matthew Graham, chief operating officer at Mortgage News Daily, said, “I think it’s painful; I think it’s ugly.”

Who is truly affected by the higher mortgage rates?

At first glance, it may appear that buyers are heavily impacted by this, but according to CNBC, would-be sellers are in a bind. They have little inclination to switch from their present 3% rate to a new purchase’s 8% rate.

“I don’t think anybody in my community of mortgage originators would disagree that in many ways, this is worse than the great financial crisis in terms of volume and activity,” Graham said.

According to the National Association of Realtors, sales of previously owned houses decreased by 2% in September compared to August, for a seasonally adjusted, annualized pace of 3.96 million units. Sales were down 15.4% from September 2022.

With that said, Melissa Cohn, regional vice president of William Raveis Mortgage in New York said, “People should know that this pain shall pass. In the next year or two years, interest rates will be lower, and people will have the ability to refinance.”

Competition for homes now is likely to be fierce. But once the interest rates go down, buyers and sellers alike are expected to be back at the market.