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First-timers opting for low down-payment mortgages

While an increase in housing sales creates a multiplier effect on the local economy, getting into the market can be difficult for first-timers.

While an increase in housing sales creates a multiplier effect on the local economy, getting into the market can be difficult for first-timers.

Saving the amount of money needed for a down payment on a house can be thorny, particularly for young people.

But by putting less money down, doors open for those who otherwise would be shut out.

“I believe you don’t have to put 20 percent down to be a responsible person and pay your mortgage,” said Mike Bower, principal at The Mortgage Co. of South Whitehall Township. “The housing market really helps most industries; it drives the economy.”

The demand for low down-payment programs is strong among young homebuyers.

According to a recent TD Bank report, the average 2016 college graduate is saddled with $37,172 in student loan debt, a figure that’s up 6 percent from 2015.

According to TD Bank’s First-Time Homebuyer Pulse, 74 percent of millennials say that saving for a down payment still represents the most significant hurdle to achieving the American dream.

TD Bank’s Mortgage Service Index showed 32 percent of respondents – including 56 percent of millennials – financed their home with a mortgage affordability program, which includes a low down-payment.

In fact, according to Bower, 49 percent of all of The Mortgage Co.’s business comes from first-time homebuyers, who frequently are strapped to make a traditional down payment. And 43 percent of its loans were for millennials.

“What we have found is that people out there don’t realize that these programs have been in place for a while,” said Barton Skurbe, senior vice president of the mortgage division for the Doylestown office of Univest Bank and Trust Co. “I think that’s why when they find out about the low down-payment programs, they get excited about them. I think more young people are realizing that home ownership is a smart choice.”

Brian Pedersen
Reporter Brian Pedersen covers construction, development, warehousing and real estate and keeps you up to date on the changing landscape of our community. He can be reached at brianp@lvb.com or 610-807-9619, ext. 4108.

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