Chicago-area residents looking to buy their first home can now access a new down payment assistance credit thanks to a partnership between mortgage lender Freddie Mac and mortgage lender Rocket Mortgage .
Freddie Mac launched a program earlier this month called BorrowSmart Access, offering first-time homebuyers in 10 metropolitan areas, including Chicago, a down payment for one or two apartments if they receive a loan from Rocket Mortgage. as a recipient of a $3,000 grant. , the nation’s largest lender. According to the company, his Freddie Mac, one of the leading financiers of mortgages in the housing market, is looking to partner with other mortgage lenders soon.
The program aims to increase the number of first-time homebuyers in the Black and Latino communities, two groups that have historically faced barriers to entering the housing market due to racism. purpose. According to Rocket Mortgage, a Chicago-area resident with an income below her 120% of the regional median, a credit score of 620 or higher, and a one-on-one financial counseling session hosted by Freddie Mac. You can qualify if you take it. According to the Chicago Housing Authority, in April 2022, the area’s median income for his family of four was $125,040.
“The idea behind programs like this is to help people in markets that were previously thought to be underserved,” said Bill Banfield, executive vice president of capital markets at Rocket Mortgage. “This means that there is a higher percentage of people who are ready to buy a home and are more likely to be of color. , and then want to support the wealth ladder to build intergenerational wealth.”
So far, 15% of all applicants to the program have come from the Chicago area, demonstrating that even in its early stages the program is having a positive impact on the community.
Chicago was chosen because of its concentration of black and Latinx potential buyers who could qualify for the program, and because the level of available housing stock in the area is higher than the national average. It’s one of 10 metropolitan areas, says Danny Gardner. Senior Vice President of Community Engagement at Freddie Mac.
The Chicago area has approximately 1.2 million “mortgage-ready consumers” under the age of 45, of whom approximately 100,000 are from Black families and 300,000 are from Latino families.
“We believe it is a market of opportunity to try to promote homeownership opportunities and help fund what we know to be the biggest challenge for new homebuyers: down payments and closing costs. “We are doing it,” said Gardner. He added that those costs have been exacerbated by the high levels of inflation and soaring house prices over the past few years, as well as rent growth.
The $3,000 down payment assistance credit is intended to act as one piece in a larger puzzle of sources of financial assistance that lenders and mortgage lenders offer first-time buyers, Gardner said.
Rocket Mortgage launched Purchase Plus in December. This is another program aimed at helping first-time homebuyers in six of her cities, including Chicago, offering up to $7,500 for mortgage costs. Local mortgage lenders such as Chicago’s Neighborhood Housing Service and the Illinois Department of Housing Development offer similar subsidies for first-time homebuyers.
As of last year, the Chicago area has one of the largest racial disparities among homeowners among the nation’s largest metropolitan areas. City Planning Council.
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Those looking to buy a home today are left with less leeway and fewer options as mortgage rates and home prices rise and inventory levels fall.
Nationally, 26% of homebuyers will be first-time buyers in 2022, the lowest percentage since the National Association of Realtors began collecting data in 1981.
Because of this difficult housing market, Naja Morris, real estate broker at @properties/Christie’s International Real Estate and client in the target market of Freddie Mac’s new program, said the program could offer more support. says.
“I’m always happy when programs come out that target underserved communities, but I often feel like they’re not enough,” says Morris. “Every year there seems to be a realignment of the needs of underserved communities and a new program that does essentially the same thing as the previous program, but usually not as much money. .”
Morris may be right that the program may not take hold.
Rocket Mortgage’s Banfield said, “I think these programs… will be fixed, which means they may end. “There’s a little bit of urgency. If you’re trying, I’ll take advantage of this now.”