A new proposal could make it easier for these professionals to buy a home.
There are several hurdles that potential homeowners must overcome in order to buy a property: Find the ideal home, qualify for one mortgageand come up with funds for a deposit. The latter can be extremely challenging for potential buyers with limited savings, but the reality is that many people can afford a monthly mortgage payment – they simply cannot afford to raise a huge pile of cash upon completion.
There is already a loan program in place for borrowers who find a down payment challenging: VA loan. These loans do not require any funds at the time of completion. As the name suggests, these mortgages are limited to active service members, U.S. veterans, and their surviving spouses.
Now lawmakers are proposing a new mortgage program that is similar to the VA loan program. And if it becomes law, it could benefit teachers and first responders in great measure.
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More loan options for some professionals
On May 13, US Representatives John Rutherford, Florida, Al Lawson, Florida, John Katko, New York, and Bonnie Watson Coleman, New Jersey introduced the Law on Homes for Every Local Protector, Educator, and Responder. Under this law, teachers and first responders could finance a home with no money lost, much like VA loans.
As with the VA loan program, which has a financing fee, this new loan program would require borrowers to pay an upfront mortgage insurance premium equal to 3.6% of the principal of a loan. Borrowers would, however Not Having to pay ongoing mortgage insurance premiums. (This is different from FHA loanwhich allow borrowers to buy with little money but require upfront and ongoing mortgage insurance premiums).
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Eligible for the new loan program include:
- Teachers in public and private schools
- police officers
To qualify for the loan program, borrowers must have worked in these professions for at least four years. You will also need to show that they have a good reputation with employers and that they intend to stay in the same type of job for at least another year.
Open the door to home ownership
In today’s real estate market, where inventory is extremely limited and house prices are inflated, a comes in deposit can be even more challenging. While low down payment (only 3.5%) programs like FHA loans already exist, some people cannot afford to save money on completion unless they run out of cash and run out of funds left over for home repairs or other emergencies. When this new loan program goes into effect, many public service professionals will find it much easier to become homeowners – and enjoy the financial stability that comes with it.