Down payment assistance is a hot topic in the mortgage industry right now, especially for first-time home buyers who struggle to provide a 20% down payment. Although a 20% down payment is not required, there are advantages to putting such a large amount down.
Shared equity programs are an emerging resource in the mortgage market that help home buyers reach the 20% down payment threshold, filling a huge need in the industry.
A shared equity program means a home buyer and a shared equity partner combine resources to jointly provide a 20% down payment; this means the home buyer has no mortgage insurance and has a lower principal and interest payment. The home buyer benefits by saving hundreds of dollars each month. The shared equity partner receives a portion of the home’s appreciation at time of sale and may, in certain circumstances, share in losses due to home deprecation. This true partnership further protects the homeowner.