The Reverse Mortgage

First-time homebuyer mortgage programs offer several benefits that can make it easier and more attainable for individuals and families to purchase their first home. You might still qualify as a first-time homebuyer even if you’ve owned a home before if you meet the following criteria: You’re purchasing the security property, you’ll reside in the security property as a principal residence and you’ve had no ownership interest (sole or joint) in a residential property during the three-year period preceding the date of the purchase of the security property. In addition, an individual who is a displaced homemaker or single parent also will be considered a first-time homebuyer if they had no ownership interest in a principal residence (other than a joint ownership interest with a spouse) during the preceding three-year time period.

If you’re looking to buy your first home, there are a few things to keep in mind when applying for a home loan. Each type of first-time homebuying mortgage has specific requirements, but here are some general qualifications to consider:

Down payment assistance (DPA) programs are here to help first-time homebuyers like you increase their buying power. They’re ideal for those borrowers who can manage monthly mortgage payments but don’t want to wait to save up for a down payment.

You can find DPA programs offered by state or local governments, as well as other organizations aiming to support first-time homebuyers. These programs can help ease the initial financial pressure of buying a home and may even cover some closing costs. And if the assistance comes as a homebuying grant, you won’t have to repay it.

We offer loan programs for first-time homebuyers designed to make homeownership more attainable. With zero and low down payment options, you can say goodbye to renting and hello to the benefits of homeownership.

1. FHA financing: For borrowers with lower incomes and credit scores, owning a home is still within reach. With more flexible requirements, FHA loans are designed to be more accessible than other types of home loans. For example, you may only need a 3.5 percent down payment and have a credit score as low as 540. Even if you haven’t established credit, we can help!
2. USDA loan: Are you looking to buy in a rural or suburban area? With USDA loans, you can enjoy benefits such as zero down payment requirements. Another advantage of USDA loans is their better-than-average interest rates, helping to reduce your long-term borrowing costs.
3. VA loans: Designed to support veterans and active-duty service members, VA home loans have zero down payment options and allow you to qualify even if you have a limited credit history. If you’re eligible for a VA loan, you may also benefit from a lower interest rate than a traditional mortgage, helping to reduce your monthly mortgage payments. VA loans offer the option for no private mortgage insurance (PMI), decreasing your overall costs.
4. Zero Down: For many first-time homebuyers, saving for a down payment is one of the first steps of the homebuying process and can take years. Our Zero Down program is an option to buy a home sooner without waiting to save. This program pairs a standard FHA first mortgage for up to 96.5 percent of the total purchase price, plus second mortgage options for your down payment and/or closing costs. The second mortgage provides down payment assistance of 3.5 to 5 percent of the purchase price as a repayable lien.
5. Payment Advantage: Reduce your rate by one percent for the first year on us. Our Payment Advantage program allows you to lock in a Conventional loan, and we’ll pay one percent of your interest rate for one year with a lender-paid temporary buydown. After the first year, you’ll have a predictable payment increase and may be eligible to refinance through programs such as the Payment Protection program, which has no lender fees. For Payment Protection program full terms and conditions, visit www.guildmortgage.com/homebuyer-protection.
6. Payment Advantage Plus: With Payment Advantage Plus, a 2-for-1 buydown program, eligible homebuyers can save even more. Payment Advantage Plus lowers your monthly payment for the first two years. When using a seller credit, your interest rate is two percent lower for the first year.* Then we’ll pay to lower the interest rate by one percent for the second year.
7. 1% Down Payment Advantage: With 1% Down Payment Advantage, you can start your homebuying journey with as little as one percent down payment, and Guild will provide a two percent grant to make up your three percent down payment requirement on a conventional loan.** Plus, we’ve added Payment Advantage, where we’ll pay your interest rate down by one percent for year one.

Buying your first home is an exciting milestone. However, there are a lot of factors to consider. These nine tips for first-time homebuyers can help you navigate the process with confidence.

*The Payment Advantage and Payment Advantage Plus programs are a promotional offer from 11/10/2022 to 12/29/2023. The Payment Advantage program is a promotional primary purchase offer on a Conventional 1-year lender-paid temporary buydown. The Payment Advantage Plus program requires seller participation to provide a seller incentive to temporarily reduce the rate by 2% for the first year. The lender promotional offer will temporarily reduce the rate by 1% for either the first or second year of the conventional mortgage on conforming and high balance loan limits. The lender and seller-paid credit will fund the buydown escrow account, and the funds will be dispersed out of the buydown escrow account during the first 12 or 24 months of the loan.
**Guild Mortgage to cover 2% of the required minimum down payment amount in the form of a non-repayable grant with a maximum grant amount of $5,000. Changes to the loan parameters, including but not limited to the loan amount, owner-occupancy status, loan to value and other factors may render the borrower ineligible for the program. Eligibility is subject to the program guidelines. The grant may only be used for the borrower’s cash investment in accordance with the program guidelines. Must lock rate on or after 6/12/2023. Not available with any other discounts or promotions. Offer cannot be retroactively applied to previously closed loans or loans that have a locked rate.

If you’re a homeowner over 62, a reverse mortgage loan allows you to access your home equity and turn it into tax-free cash—while you continue to live in and own your home.

A reverse mortgage differs from a Conventional mortgage, where a homeowner makes monthly mortgage payments, gradually decreasing the principal balance and increasing home equity. With a reverse mortgage, we make payments to you, and your loan balance grows with each one.

A monthly mortgage payment isn’t required for a reverse mortgage as long as you pay your property taxes, insurance and applicable HOA dues. However, just like any mortgage, the loan must be repaid when the borrower passes away, sells the home or moves out.

If you’re interested in a reverse mortgage loan, the first step is to meet with a HUD-approved counselor and undergo a financial assessment and counseling session to determine if this is the right loan solution for you.

To be eligible, you must meet these five qualifications:

1. You must be 62 years of age or older

2. You own your home and use it as your primary residence

3. The house is single-family, multi-family (up to four units) or an approved condominium or manufactured home

4. You own your home free and clear or have a small amount left to pay on the existing mortgage

5. Your home is in good condition before taking out the loan

According to the Consumer Financial Protection Bureau (CFPB), there are several types of reverse mortgages. The most popular are home equity conversion mortgages (HECMs)* insured by the Federal Housing Administration (FHA). A HECM is a federally insured reverse mortgage that allows qualifying homeowners to access the equity in their property and use it to supplement retirement income.

While a reverse mortgage can be a valuable financial tool, it’s essential to understand the potential benefits and drawbacks to make an informed choice about whether it’s the right option for you and your retirement goals.

There are several potential benefits to a reverse mortgage:

• Convert your home equity into cash

  Reverse mortgages can give you greater flexibility in using your home equity.

• No more monthly mortgage payments

  Unlike a Conventional mortgage, a reverse mortgage does not require monthly payments.

• Use the funds for anything you choose

  These funds can be used as supplemental income however you choose. Common uses include saving for retirement, vacationing, improving your property or paying for medical expenses.

• Stay in your home

  You’re still the owner of your home, and your equity is protected up to the loan amount. A reverse mortgage can also help address your concerns about the high cost of downsizing or relocating.

• The loan doesn’t have to be repaid

  As long as you live in your home and meet your loan terms, repayment is deferred until you sell or no longer use the home as your primary residence.

• It’s a non-recourse loan

  This means you’ll never owe more than your home is worth.

While there are many benefits to a reverse mortgage, there are also several drawbacks. Here are some of the most common cons:

• Higher costs

  Reverse mortgages can give you greater flexibility in using your home equity.

• Reduces your home equity

  Since the loan balance typically grows over time as interest and fees accumulate, a reverse mortgage can decrease the equity you have in your home. In addition, failing to maintain your home or make necessary repairs can lower its value and potentially reduce the amount of equity available.

• Use the funds for anything you choose

  These funds can be used as supplemental income however you choose. Common uses include saving for retirement, vacationing, improving your property or paying for medical expenses.

• The ongoing costs of homeownership don’t go away

  If you’re unable to meet the obligations of a reverse mortgage, such as paying property taxes or maintaining homeowners insurance, you may be at risk of foreclosure.

• It may impact retirement benefits like Medicaid or Supplemental Security Income (SSI)

  A detailed discussion with a HUD-approved counselor will give you important information to help you decide whether a reverse mortgage is right for you. To get the most out of your counseling session, CFPB recommends coming prepared to discuss your financial needs and goals and the circumstances leading you to consider a reverse mortgage.

Another way to borrow cash against your equity is through a home equity program. A HELOC is a line of credit secured by your home. You can use your revolving credit line for large purchases such as tuition, renovations and emergency expenses. A home equity loan (HELOAN) provides up to 95 percent of your home’s equity as a piggyback second mortgage.

Discover how much you may get from a reverse mortgage with the Guild Mortgage reverse mortgage calculator, then let’s connect.