With mortgage interest rates at historic lows, a new generation of homebuyers is looking to buy their first homes. While many of these buyers have substantial, reliable income, they may also be facing significant student debt and lack the cash for a traditional down payment.

While several mortgage options may fit their needs, a new product that Open Mortgage loan originators can discuss with their clients is the Wealth Builder program.  

Building Equity is Building Wealth

Designed for borrowers who place a priority on increasing their home equity sooner rather than later, the Wealth Builder program helps buyers to accomplish that goal without the requirement of a large down payment.

Buyers can finance the full price of their new home, though they will need to contribute the greater of $1,000 or 1 percent of the loan amount toward closing the loan. Pairing today’s low interest rates with the option of a 20 or 15-year term provides an opportunity to quickly build equity in the home. The 20-year term, in particular, presents an additional option to balance minimizing mortgage payments with paying down the loan when compared with more traditional 30 and 15-year terms.

Shoppers with student debt can appreciate the mortgage’s accommodation of income-based repayment plans and similar programs to maximize borrowing power.  

Adjustable Rate Offers Savings and Flexibility

Another feature of the Wealth Builder Program is the choice of several adjustable rate options. The 5/1 and 7/1 ARM terms will provide a fixed interest rate for the first five or seven years, followed by annual adjustments according to the loan’s index rate and additional terms. A 5/5 ARM is also offered. This version will remain at the initial fixed rate for five years before adjusting in the sixth year. It will continue to adjust every fifth year until the loan is paid off. 

As an adjustable rate mortgage, the Wealth Builder program lets buyers take advantage of the lowest possible interest rates currently available to them, and can be especially appealing for buyers who will be considering selling the home prior to the expiration of their initial fixed-rate term.

Borrowers interested in the Wealth Builder Program will need to have a credit score of at least 680 and are limited to single-family homes, condos, or planned unit developments (PUD). Seller contributions are limited to 3 percent of the loan value, but gift funds are acceptable with certain restrictions.

To learn more about the Wealth Builder Program and make home equity an essential part of your financial future, call Open Mortgage today.

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