For just about anyone from any generation, the first thing a potential homebuyer needs to do is talk to a mortgage professional. Most Generation-Z homebuyers are going to be hamstrung because the affordability factor today versus, say, even 10 years ago is much higher. It is not only harder to qualify but also the interest rates are higher.
So, if you are interested in a police home loan, talk to Police Mortgage first. Then we can set a realistic timeframe together. There are many ways you can qualify but we may have to be a little bit more creative than in the past.
I also believe that there has to be a dedication to saving money. That’s usually the hardest part. Modern society is so reliant on revolving credit that many people are going into debt to be able to live the good life. This has been going on for decades and credit has exploded over the last 30 years or so. That has brought on a generation of debt at higher interest rates that is harder to pay off.
We respect our clients and we share the hard facts with them. Some might not be pleasant. For instance, if you are renting you may need to consider living at home for a year and saving that money. If somebody doesn't have the ability to live at home and has to rent then it might be a more difficult path to save.
One thing that has gotten better over the years with mortgage products is there are more options. Both Fannie Mae and Freddie Mac have 3% down payment alternatives. FHA has a 3.5% down option. If you are active military or an active reservist, VA loans have a no money down possibility.
Someone at 23 years of age making about $80,000 a year gross income but doesn’t have any savings will probably be able to qualify based on the income. However, he or she probably won't be able to qualify for a law enforcement house loan based on the down payment. That’s primarily because home values have gone up so much in the last few years.
A realistic expectation is a minimum of a $9,000 down payment plus closing costs. A potential homebuyer will probably need at least $12,000 to $15,000 of savings.
Those with 401Ks may be able to borrow against it. That is a very viable option. Some police officers who have deferred compensation plans may be able to use some of that money for the purposes of buying a home.
Homebuyers need to understand the money they have available. Are there enough savings? Is it in a 401K? Is it in some kind of defined compensation plan? Does your employer have any ability to help and assist with providing an avenue to borrow the money for down payment?
If the average 30-year police officer mortgage is a fixed rate loan at 7%, historically that isn’t terribly high. It's an affordable rate, but the price of the home may not be and, therefore, the amount of money needed for the down payment may be the biggest obstacle.
Are there opportunities for Gen Z homebuyers? Of course, there are. However, it’s going to take some discipline. That’s not to say that those in their 20’s can’t enjoy their lives, but if you want to achieve home ownership you're going to have to make some type of sacrifice. Police Mortgage will do everything we can to help but understand that it will require some work.
Police Mortgage specializes in conventional mortgages, purchase money transactions, FHA loans, and VA loans. Led by founder and CEO John Aretos, Police Mortgage is known and respected for providing clients with exceptional service, customized terms, quick and easy closings, and low money down options. To learn more about Police Mortgage, call 312-499-8878 or Connect with a Mortgage Expert.
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