|By Marietta Rodriguez |
Programs & Lending
We couldn’t disagree more.
At NeighborWorks America, and throughout the NeighborWorks network, affordability simply means how much of a homeowner’s current income has to go each month toward the payment on a safe, sustainable mortgage. Under that definition, the cost of mortgage finance is as low as it has ever been.
What is affecting the ability of the housing market to recover fully is not a question of affordability, but of credit accessibility, and here Mr. Davidson gets it right. His research finds that because homeowners today need larger down payments to be approved for a mortgage, the all-in cost of homeownership has increased. NeighborWorks America won’t argue with that; higher down payments do mean that it costs more and that it is harder to become a homeowner. We just think that the higher down payments costs are an unnecessary barrier to homeownership.
Since we have seen even homes with higher down payments go into foreclosure in recent years, we know that equity -- while an important driver of default -- is not the only driver. Lenders need to more aggressively and more broadly consider the value of pre-purchase homebuyer education when evaluating a borrower. Such education mitigates default and improves homebuyer accessibility, which in today’s low rate market, also means improved homebuyer affordability.