Lenders are trying to revitalize their sagging business models with more flexible loan options to help buyers across the wide spectrum. HECM loans which are often referred to as "reverse mortgages" although these are not the old reverse mortgages of yesteryear. These loans are for older Americans looking to use the equity in their home as a source of income or to eliminate a house payment.
Another popular blast from the past is the seller second. Lenders are once again embracing sellers willing to carry a second to help a buyer get into a property. Sellers with strong equity position can offer to carry back a second mortgage at a rate and term favorable to both parties. This can help a buyer qualify for a house they otherwise could not. The seller makes 6-7% on their investment.
These types of programs are not for everyone, but for some it can be the golden ticket. Buyers struggling to find the right home with the right terms should talk to their mortgage professional and see what alternative financing options are available to them. Older Americans above age 62 can also see if a HECM loan is a good product to consider.
Real estate is an important piece of the wealth puzzle and buyers historically have found a way to buy even when rates were in the teens back in the early 80s. The rates we see now are very comparable to rates we had just 15-17 years ago in the mid 2000s. Lenders had more tools in their toolbox back then and some of those products will never return, and that's a good thing honestly. But some of those products are returning and they are welcome in this challenging market.
Don't give up buyers, new solutions are arriving often and it is wise to stay in touch with your lender as we move forward into a little less hectic market this spring.