New partnership aims to clear the path
Soaring home prices have yielded a boon to homeowners’ tapping equity on their properties for a myriad of reasons – from paying for a child’s college tuition to remodeling. But for would-be homebuyers, skyrocketing values have made it difficult to get enough cash together for a decent down payment.
The struggle is real. First-time buyers now should expect to spend a year longer saving for a 20% down payment than they would have needed five years ago, according to a Zillow study. Those who rent will need to save an additional $369 monthly in the coming year just to keep up with the predicted growth in home values, according to the study.
Stated in a decidedly more startling, sobering manner: US renters earning the typical renter income and saving at the typical renter rate should expect it to take more than a quarter of a century to save up for a 20% down payment on the typical starter home – a time frame that can be even longer for many renters of color, according to the study.
Enter real estate website Zillow to help ameliorate the roadblocks toward home ownership. Through a partnership with Down Payment Resource, the company has added a widget to its home listings enabling users to check if they qualify for down payment assistance programs rendering home ownership more attainable – particularly for first-time home buyers. Down Payment Resource is a technology firm that tracks funding status, eligibility rules, benefits and other factors for more than 2,000 down payment assistance and affordable lending programs.
Such resources aren’t new, but something of a well-kept secret. The funding sources now take center stage on the Zillow site amid photographs of homes on the market and listing details of interest to potential buyers – proximity to quality school districts, presence of restaurants, points of interest, access to major highways and more.
Despite a general lack of awareness of such assistance resources – that could help buyers with down payments, closing costs or taxes – all 3,143 US counties have at least one down payment assistance program, and more than 2,000 counties have at least 10. A Down Payment Resources analysis found the estimated benefit of a down payment assistance program is about $17,000, the lion’s share in down payment help and closing costs on eligible for-sale listings nationwide.
“These 2,000 plus programs are administered by some 1,200 program providers, and they have different types of programs, different eligibility rules, different terms, different benefit amounts,” Down Payment Resource CEO and founder Rob Chrane told Mortgage Professional America in a telephone interview.
“Some of the programs are grants,” Chrane added. “It’s literally free money with no indebtedness incurred. The majority of them are repayable at the time the homeowner sells the home. Most of the time, they don’t have monthly payment in the interim. There’s a relatively small percentage of programs that might have a nominal interest rate or nominal payment, but if you look at the database, the majority of them are repayable due on sale so there’s no interest or monthly payment being made.”
It’s kind of like a match.com for down payment assistance, one observer told Chrane – in this case a website service hooking homebuyers up with needed resources to attain their dream home.
For Grace Chung, Zillow’s director of social impact, the resources conduit represents nothing short of a viable pathway to home ownership and a key stepping stone toward the building of generational wealth and economic opportunity – particularly for people living in underrepresented communities.
“Our mission is to give people the power to unlock life’s next chapter,” she said in a telephone interview. “As an extension of our mission, our social impact focus is to unlock opportunities for everyone, especially underrepresented and underserved communities. Our social impact priorities are anchored around housing security, economic opportunity, and equitable industry. As it relates to economic opportunity, we’re focused on creating more equitable pathways to generational wealth through home ownership.”
It’s long been said that information is power. That sentiment, Chung suggested, is at the heart of the Zillow/Down Payment Resource partnership.
“We know there are barriers to home ownership, and we want to break those down,” she told Mortgage Professional America. “We know down payment is a key barrier to that, especially for underrepresented communities, and buyers who may not have considered themselves ready for home ownership.”
That reality dovetails to the Zillow’s corporate values, Chung added. “Tying it back to our core values – which is to turn on the lights – we believe information is power, and this partnership really allows us to give information back to potential homebuyers who may never have considered themselves ready for it,” he said.
