The crisis of an inventory shortage, cost of homes and of high taxes along with the inflationary economy have propelled the federal housing Administration (FHA) to develop a “new solution” for individuals seeking to buy a home, typically for the first time. The introduction of the first time ever 40-year mortgage will be available in May 2023.
The Housing and Urban Development Administration (HUD) felt this change was necessary in order to “help borrowers affected by COVID-19 or financial hardships.”
It will allow potential borrowers to spread out their monthly payments over a 40-year period, and thus give extra budget room for the down payment or monthly costs.
By purchasing a home sooner rather than later, first-timers will be able to build equity rather than paying rent, where there is no avenue of benefiting from the appreciation of the property that they occupy.
Despite the fact that for the first 4 to 5 years most of the payments are going toward interest, should the borrower come into any windfall of cash, those funds can be applied to principal, and moving further down the line, such a mortgage could be refinanced to have a shorter term.
This HUD strategy is based upon historical data that points toward the overall increase in home valuation.
If you have any questions about this information or title insurance, please contact Ralph Aponte: 732.914.1400.
Counsellors Title Agency, www.counsellorstitle.net, founded in 1996, is one of New Jersey’s most respected title agencies, serving all 21 New Jersey counties with title insurance, clearing title, escrow, tidelands searches, and closing and settlement services for commercial or industrial properties, waterfront properties and marinas, condominiums, townhouses or residential single-family homes. Counsellors Title also features its own Attorney Settlement Assistance Program™ [ASAP], which is an individual resource customized to fit the needs specifically of real estate attorneys, including, Documentation, Preparation, Disbursement of Funds, Attendance at Closing, HUD Preparation or Post-Closing Matters.
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