Todays 3 Percent Down Mortgage Options 2019

Today’s
3% Down
Payment
Options
Presented by: Scott Meerstein - Sr. Lead Inside Sales Rep

The information presented in this presentation is for general information only, and is based on guidelines
and practices generally accepted within the mortgage finance industry and is not intended to be all-
inclusive. MGIC makes no representations or warranties of any kind with respect to the accuracy,
completeness or suitability for any purpose of the information contained in this presentation. MGIC
expressly disclaims any and all warranties, express or implied, including without limitation warranties of
merchantability and fitness for a particular purpose regarding these materials and this presentation. In no
event will MGIC be liable for any direct, indirect, incidental, punitive or consequential damages of any kind
with respect to the presentation or materials provided. All examples are hypothetical and are for illustrative
purposes only. This presentation is not intended and should not be interpreted or relied upon as legal
advice. We encourage you to seek advice from a qualified professional.
Before we get started…

Why is it so important?
For you

Source: MBA October 2018 forecast
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
($Billions)
Mortgage Originations History & Forecast

Source: MBA October 2018 forecast
0
200
400
600
800
1,000
1,200
1,400
2017 2018 2019 2020 2021
($Billions)
Mortgage Originations History & Forecast

MeetYour Competition
Consumers who would consider
a mortgage from:
• PayPal = 48%
• Walmart = 33%
Source: Carlisle & Gallagher Consulting Group

• In the UK: If you ask the virtual assistant to "open UKMortgage"
it will activate a broker app to help compare home loans
• Amazon is looking to hire the head of a newly-formed
mortgage lending division (HousingWire March 2018)
• Amazon “is definitely looking” to enter mortgage banking
but hasn’t decided on the best route (IMF June 2018)

Your Competition &YOU
Competition You
Rates ✓ ✓
Guidelines ✓ ✓
Products ✓ ✓
Services ✓ ✓

MGIC.com/social
Hope is
not a strategy

Your Competition &YOU
Competition You
Rates ✓ ✓
Guidelines ✓ ✓
Products ✓ ✓
Services ✓ ✓
You ✓

Why is it so important?
For your customers

MGIC.com/social
80%
Non-owners who report that
homeownership is part of their
American Dream
Source: NAR’s 2018 Aspiring Home Buyers profile

MGIC.com/social
82%
Non-owners who aspire
to be homeowners
Source: NAR’s 2018 Aspiring Home Buyers profile

MGIC.com/social
Top primary reason for buying now
for buyers 62 and younger:
Desire to own a home of my own
Source: NAR 2018 Home Buyer and Seller Generational Trends

MGIC.com/social
Owning a home increases number
of hours spent volunteering
Source: The Journal of the Center for Real Estate Studies Oct. 2017

MGIC.com/social
Children of homeowners
do better in school
Source: Forbes August 2016

MGIC.com/socialSource: The Journal of the Center for Real Estate Studies Oct. 2017
Homeowners are 2.5x more likely
to be in good health

MGIC.com/social
$250,000
$264,750
$275,870
$283,870
$291,250
$299,697
January 2018 January 2019 January 2020 January 2021 January 2022 January 2023
$49,697
Increased home equity based on price appreciation projected by the Home Price Expectation Survey
potential growth in family wealth over the next
five years based solely on increased home equity
Source: Home Price Expectation Survey 2018 3Q

MGIC.com/socialSource: The Washington Post September 2017
45x Amount average net worth
of homeowner is nearly
greater than renters

MGIC.com/socialSource: The Washington Post September 2017
From 2013 – 2016 average net worth
Homeowners = +15%
Renters = - 5%

Months Inventory of
Homes for sale
2011 - Today
Source: NAR 8/2018
January
2011
January
2012
January
2013
January
2014
January
2015
January
2016
January
2017
January
2018

MGIC.com/socialSource: NAR 7/2018
Average days on market

MGIC.com/social
Mo Money
Source: MSN August 2018
Millennials buying first
home will pay 39% more
than baby boomers who
bought first home in 1980s

MGIC.com/social
Year-Over-Year Appreciation
WA
11.0%
OR
7.9%
MT
6.0%
WY
3.7%
CO
9.6%
ID
13.0%
NV
17.0%
UT
9.9%
NM
4.9%
ND
2.1%
SD
4.5%
MN
6.3%
NE
6.9%
IA
6.0%
KS
5.5%
MO
5.7%
OK
3.4%
TX
5.9%
AR
3.7%
LA
2.3%
KY
7.5%
TN 7.5%
MS
3.2%
AL
6.1%
WI
7.1%
MI
7.7%
IL
4.1%
IN
8.3%
OH
5.8%
FL
8.5%
GA
8.0%
SC
8.3%
NC
6.2%
VA
4.3%
WV
2.3%
DE
4.3%
NH
6.7%
MD
3.8%
NJ
4.1%
CT
2.4%
VT 5.6%
DC
11.8%
ME
6.6%
NY
6.5%
PA
4.9%
AZ
9.5%
AK
2.6%
HI
4.7%
RI
8.1%
MA 5.9%
CA
7.1%
Four-Quarter Change: Purchase-Only Index
2017Q2 – 2018Q2
United States = 6.5%
0% or less
0.1% - 3.0%
3.1% - 5.0%
5.1% - 10.0%
10.1% or
higher
Source: FHFA U.S. House Prices August 22, 2018
Appreciation

Source: August 2018 forecasts
Quarter Fannie Mae
Freddie
Mac
MBA NAR Average
2018 2Q 4.5 4.5 4.5 4.5 4.5
2018 3Q 4.5 4.6 4.6 4.7 4.6
2018 4Q 4.6 4.8 4.8 4.8 4.75
2019 Q1 4.7 ----- 4.9 4.9 4.833
2019 Q2 4.7 ----- 5.0 5.0 4.9

U.S.30 year fixed-rate
Source: Freddie Mac Rate Survey, August 16, 2018
0.00
2.00
4.00
6.00
8.00
10.00
12.00
14.00
16.00
18.00
20.00
8/16/71
8/16/72
8/16/73
8/16/74
8/16/75
8/16/76
8/16/77
8/16/78
8/16/79
8/16/80
8/16/81
8/16/82
8/16/83
8/16/84
8/16/85
8/16/86
8/16/87
8/16/88
8/16/89
8/16/90
8/16/91
8/16/92
8/16/93
8/16/94
8/16/95
8/16/96
8/16/97
8/16/98
8/16/99
8/16/00
8/16/01
8/16/02
8/16/03
8/16/04
8/16/05
8/16/06
8/16/07
8/16/08
8/16/09
8/16/10
8/16/11
8/16/12
8/16/13
8/16/14
8/16/15
8/16/16
8/16/17
8/16/18

U.S.30 year fixed-rate
Source: Freddie Mac Rate Survey, August 16, 2018
3.00
3.25
3.50
3.75
4.00
4.25
4.50
4.75
5.00
8/16/15
9/16/15
10/16/15
11/16/15
12/16/15
1/16/16
2/16/16
3/16/16
4/16/16
5/16/16
6/16/16
7/16/16
8/16/16
9/16/16
10/16/16
11/16/16
12/16/16
1/16/17
2/16/17
3/16/17
4/16/17
5/16/17
6/16/17
7/16/17
8/16/17
9/16/17
10/16/17
11/16/17
12/16/17
1/16/18
2/16/18
3/16/18
4/16/18
5/16/18
6/16/18
7/16/18
8/16/18

MGIC.com/social
0%
5%
10%
15%
20%
25%
30%
35%
40%
High taxes Affordable
housing
Income gap
between rich
and poor
Rising interest
rates
Inflation The federal
budget deficit
Job
opportunities
for people
without college
education
Overall
employment
rate
Americans
losing jobs to
foreign
workers
The income
gap between
races
The income
gap between
genders
Restrictive
immigration
policies that
reduce
available labor
The trade
deficit
All survey respondents
“What do you see as the top economic concerns facing the U.S.? Select up to three options.”
Source: Redfin February 2018
Interest rate concern

MGIC.com/social
“If mortgage rates were to rise above 5%, what effect would it have on your home-buying plans?”
0%
5%
10%
15%
20%
25%
30%
I'd slow down my search and see if
rates come back down
No impact I'd increase my urgency to buy before
rates went up further
My urgency wont change, but I'd have
to look in other areas or buy smaller
home due to increased payment
I'd cancel my plan to buy a home
All survey respondents who said they plan on trying to buy a home in next 12 months
Source: Redfin February 2018
Interest rate concern

MGIC.com/social
Reduced purchase power
RATE
P&I + MI
rounded to the nearest dollar amount; assuming 700 credit score
Cost of waiting
5.50 $1,079 $1,109 $1,139 $1,169 $1,199
5.25 $1,052 $1,081 $1,111 $1,140 $1,169
5.00 $1,026 $1,054 $1,083 $1,111 $1,140
4.75 $1,000 $1,028 $1,056 $1,083 $1,111
4.50 $974 $1,001 $1,029 $1,056 $1,083
Purchase
price
$180,000 $185,000 $190,000 $195,000 $200,000

1.00%
1.50%
2.00%
2.50%
3.00%
3.50%
4.00%
Mar-07
May-07
Jul-07
Sep-07
Nov-07
Jan-08
Mar-08
May-08
Jul-08
Sep-08
Nov-08
Jan-09
Mar-09
May-09
Jul-09
Sep-09
Nov-09
Jan-10
Mar-10
May-10
Jul-10
Sep-10
Nov-10
Jan-11
Mar-11
May-11
Jul-11
Sep-11
Nov-11
Jan-12
Mar-12
May-12
Jul-12
Sep-12
Nov-12
Jan-13
Mar-13
May-13
Jul-13
Sep-13
Nov-13
Jan-14
Mar-14
May-14
Jul-14
Sep-14
Nov-14
Jan-15
Mar-15
May-15
Jul-15
Sep-15
Nov-15
Jan-16
Mar-16
May-16
Jul-16
Sep-16
Nov-16
Jan-17
Mar-17
May-17
Jul-17
Sep-17
Nov-17
Jan-18
Mar-18
May-18
Jul-18
All nonfarm employees
Source: Economic Policy Institute’s analysis of Bureau of Labor Statistics August 2,, 2018
EPI wage target
Growth of nominal wages

August 2017 – August 2018
Wages up 2.9%
Cost of living up 2.9%
Source: Department of Labor

After adjusting
for inflation,
wages are only
10% higher in
2017 than they
were in 1973
Source: The Hamilton Project, Brookings Institute

$300
$350
$400
$450
$500
$550
$600
$650
$700
$750
$800
$850
$900
$950
$1,000
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
28%
of nonowners say
they can not save for
a down payment because
of rising rent
Source: Nar HOME Survey March 2018
Median asking
RENT
since 1988
Source: Census

MGIC.com/socialSource: Rentcafe March 2018
$93,000
Amount Millennials spend
on rent by time they hit 30

Source: Freddie Mac The Top
Misconceptions About Homebuying
Dec 2017
70%
Of consumers
fear not having
enough for a
down payment

MGIC.com/socialSource: Neighborhood Works America at Home Survey September 2017
What is preventing people from buying?
6%
11%
7%
3%
12%
17%
20%
0% 5% 10% 15% 20% 25%
Belief a home is not a good investment now
Concerns about maintenance/repair costs
Lack of job security
Student loan debt
Belief you can't afford your preferred neighborhood
Weak or bad credit
Lack of a down payment
If you were in the market to buy a home, which of the following would be the greatest obstacle to you personally?
Adults
21%
Other/DK/Not in the
market to buy a home

MGIC.com/socialSource: Neighborhood Works America at Home Survey September 2017
What is preventing Millennials from buying?
6%
8%
9%
10%
12%
22%
25%
0% 5% 10% 15% 20% 25% 30%
Belief a home is not a good investment now
Concerns about maintenance/repair costs
Lack of job security
Student loan debt
Belief you can't afford your preferred neighborhood
Weak or bad credit
Lack of a down payment
If you were in the market to buy a home, which of the following would be the greatest obstacle to you personally?
7%
Other/DK/Not in the
market to buy a home

0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
Insufficient credit score
or credit history
Affording the down
payment or closing
costs
Insufficent income for
monthly payments
Too much existing debt Lack of job security or
stability
The process is too
complicated
(select up to 3)
Renters Owners Source Fannie Mae June 2018
What would be your biggest obstacle to getting
a mortgage to purchase or refinance a home today?

MGIC.com/social
How much do lenders require you to put down?
20% 19%
30% 26%
34%
25%
17%
30%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Total Millennials
From what you have seen, read or heard, for someone to be able to purchase a home, what is the
minimum percentage down payment (must pay at closing) in order for someone to qualify and
finalize the transaction (purchase)? Please give your best estimate.
1-9% 10% 11-20% 21-100%
Source: Neighborhood Works America at Home Survey September 2017

MGIC.com/social
0%
20%
40%
60%
80%
100%
More than 20%
15%-20%
10%-14%
6%-9%
4%-5%
Less than 3%
Source: NAR HOME Survey September 2016
86%
Millennials who believe you need
10% or more down

MGIC.com/social
0%
20%
40%
60%
80%
100%
More than 20%
15%-20%
10%-14%
6%-9%
4%-5%
Less than 3%
82%
GenXers who believe you need
10% or more down

MGIC.com/social
0%
20%
40%
60%
80%
100%
More than 20%
15%-20%
10%-14%
6%-9%
4%-5%
Less than 3%
87%
Young Boomers who believe you
need 10% or more down

MGIC.com/social
87%
First-time home buyers who would
take advantage of down payment
assistance programs
Source: Bank of America Homebuyer Insights Report April 2017

MGIC.com/social
Source: Freddie Mac
Less than a third of consumers are familiar with low-down-payment programs

MGIC.com/socialSource: PewResearch Dec 2016
Renters went from
17% likelihood to buy
when assuming 20%
down payment to
58% when told they
could put 5% down.

MGIC.com/social
HomeReady® Mortgage Loans
• 97% financing
• No minimum borrower contribution
• Lower than standard MI coverage levels on LTVs above 90%
• LLPAs waived on LTVs > 80% and credit score ≥ 680
• Allows for all MI premium plans

MGIC.com/social
Home Possible® & Home Possible Advantage®
• 97% financing
• No minimum borrower contribution
• Lower than standard MI coverage levels
• May use Loan Product AdvisorSM or manually underwrite
• No reserve required for 1-unit primary residence
• Allows for all MI premium plans

MGIC.com/social
So how do they all compare?

MGIC.com/social
Fannie Mae Freddie Mac
Standard HomeReady HomeOne Home Possible
First-Time Homebuyer At least 1 borrower Not required At least 1 borrower Not required
Income Limits No limits
100% of AMI
No limits in
low-income
census tracts
No limits
100% of AMI
No limits in
low-income
census tracts
Today’s 97% LTV Options

MGIC.com/social
First-Time Homebuyer At least 1 borrower Not required At least 1 borrower Not required
Income Limits No limits
100% of AMI
No limits in
low-income
census tracts
No limits
100% of AMI
No limits in
low-income
census tracts
Borrower Contribution
from Own Funds
No minimum required No minimum required
Reserves Determined by Desktop Underwriter®
Determined by
Loan Product Advisor®
Determined by Loan
Product Advisor® or
none for manual
underwrite

MGIC.com/social
CLTV 105% if community Seconds® loan 105% if Affordable Seconds® loan
Occupancy Primary residence Primary residence

MGIC.com/social
HomeReady
Non-occupant borrowers permitted to
maximum 95% LTV in DU; 90% LTV manual
with max 43% debt-to-income (DTI) for
occupying borrower.
Income considered as part of qualifying
income and subject to income limits.
Home Possible
Effective October 29: Mortgages
secured by 1-unit properties permitted
with maximum 95% LTV for Loan
Product Advisor® Mortgages; 90% LTV
for Manually Underwritten Mortgages
with max 43% DTI

HOME POSSIBLE MORTGAGES
Effective October 29, 2018
In response to Seller feedback,
we evaluated our requirements
for Home Possible and Home
Possible Advantage Mortgages
and are combining Home
Possible and Home Possible
Advantage into one offering in
an effort to better help Sellers
originate Home Possible
Mortgages.

Maximum DTI for
manual underwrite
45% for all manually
underwritten Home
Possible Mortgages

MGIC.com/social
Manufactured Homes Ineligible, unless MH Advantage Ineligible
Number of Units 1-unit 1-unit

MGIC.com/social
Homebuyer Education Not required
Required for at least
1 borrower
1 borrower when all borrowers are FTHBs*
* OR credit reputation established using only noncredit payment
(nontraditional) references

MGIC.com/social
1 borrower
1 borrower when all
borrowers are FTHBs
Required for at least 1
borrower when all
borrowers are FTHBs
Eligible Homebuyer
Education
N/A Framework
Homeownership*
MGIC’s at Readynest.com OR
Freddie Mac’s CreditSmart®
OR
Hud-approved agency
* Homeownership education course required by a Community Seconds/DPA program that is
provided by a HUD-approved agency OR Housing Counseling from a HUD-approved
nonprofit housing counseling agency as evidenced by a completed Fannie Mae Form
1017 (must occur prior to buyer signing purchase contract)

MGIC.com/social
1 borrower
1 borrower when all
borrowers are FTHBs
Required for at least 1
borrower when all
borrowers are FTHBs
Eligible Homebuyer
Education
N/A Framework
Homeownership*
MGIC’s at Readynest.com OR
Freddie Mac’s CreditSmart®
OR
Hud-approved agency
MI coverage
35%
OR
18% + Minimum MI
Loan-level Price
adjustment
25%
OR
18% + Minimum MI
Loan-level Price
adjustment
35%
OR
18% + Minimum MI
Delivery fee
25%
OR
18% + Minimum MI
Delivery fee

MGIC.com/social
So who should go FHA and who should go conventional?

MGIC.com/social
Consider & Compare
760 FICO$250,000 purchase
FHA
96.5%
MGIC 97%
HomeReady/
Home Possible
MGIC 97%
Standard/HomeOne
Down Payment $8,750 $7,500 $7,500
Base Loan Amount $241,250 $242,500 $242,500
Less down

MGIC.com/social
Consider & Compare
FHA
96.5%
MGIC 97%
HomeReady/
Home Possible
MGIC 97%
Standard/HomeOne
Down Payment $8,750 $7,500 $7,500
Base Loan Amount $241,250 $242,500 $242,500
Upfront Premium
(financed into loan amount)
$4,222 $0 $0
Total Amount Borrowed $245,472 $242,500 $242,500
$2,972 less

MGIC.com/social
Consider & Compare
FHA
96.5%
MGIC 97%
HomeReady/
Home Possible
MGIC 97%
Standard/HomeOne
Down Payment $8,750 $7,500 $7,500
Base Loan Amount $241,250 $242,500 $242,500
Upfront Premium
$4,222 $0 $0
Interest Rate 4.5% 4.625% 4.75%
Monthly MI Payment $170 $65 $81

MGIC.com/social
Consider & Compare
FHA
96.5%
MGIC 97%
HomeReady/
Home Possible
MGIC 97%
Standard/HomeOne
Down Payment $8,750 $7,500 $7,500
Base Loan Amount $241,250 $242,500 $242,500
Upfront Premium
$4,222 $0 $0
Interest Rate 4.5% 4.625% 4.75%
Monthly Loan Payment
(P&I+MI)
$1,414 $1,312 $1,346 Less per month

MGIC.com/social
Consider & Compare
FHA
96.5%
MGIC 97%
HomeReady/
Home Possible
MGIC 97%
Standard/HomeOne
Down Payment $8,750 $7,500 $7,500
Base Loan Amount $241,250 $242,500 $242,500
Upfront Premium
$4,222 $0 $0
Interest Rate 4.5% 4.625% 4.75%
(P&I+MI)
$1,414 $1,312 $1,346
assuming 3% annual appreciation
Est. MI Cancellation Month Not Cancellable 61 61
Est. Payment in 5 years
assuming cancellation
$1,398 $1,247 $1,265

MGIC.com/social
Consider & Compare
$250,000 purchase
FHA
96.5%
MGIC 97%
HomeReady/
Home Possible
MGIC 97%
Standard/HomeOne
Down Payment $8,750 $7,500 $7,500
Base Loan Amount $241,250 $242,500 $242,500
Upfront Premium
$4,222 $0 $0
Interest Rate 4.5% 4.625% 4.75%
(P&I+MI)
$1,414 $1,407 $1,465
assuming 3% annual appreciation
Est. MI Cancellation Month Not Cancellable 61 61
Est. Payment in 5 years
assuming cancellation
$1,414 $1,247 $1,265
680 FICO
FHA monthly
savings = $60
Extra down payment
+ $1,250
Upfront MI
+ $4,222
Total = $5,472
$5,472 ÷ $60=
7.6
years

MGIC.com/social
When that dream home leaves them cold
We insure Fannie Mae HomeStyle® Energy mortgages

MGIC.com/social
For when they’re not sure what to do about that fixer-
upper… and then it hits them
We insure Fannie Mae HomeStyle® Renovation mortgages

MGIC.com/social
When that dream home
doesn’t quite measure up
We insure Freddie Mac
Renovation mortgages

@mgic
mgic.com/mgicconnects
MGICvideos

Todays 3 Percent Down Mortgage Options 2019

Empfohlen

Empfohlen

Weitere ähnliche Inhalte

Was ist angesagt?

Was ist angesagt? (20)

Ähnlich wie Todays 3 Percent Down Mortgage Options 2019

Ähnlich wie Todays 3 Percent Down Mortgage Options 2019 (20)

Mehr von Dean Wegner of Guardian Mortgage, Arizona 602-432-6388

Mehr von Dean Wegner of Guardian Mortgage, Arizona 602-432-6388 (20)

Kürzlich hochgeladen

Kürzlich hochgeladen (20)

Todays 3 Percent Down Mortgage Options 2019