Could Small-Dollar Mortgages Help Solve Housing Affordability Woes?
Saving for a downpayment is becoming even harder nationwide as incomes remain stagnant while rents continue to rise. Low and middle-income families can't seem to keep up with this pace, however, there is a possible solution that could get some of these folks into a home.
"In 2018, there were more than 700,000 homes sold for $85,000 or less across the country. Our research has shown that homes in this price range are significantly less likely to be financed with a mortgage than higher-prices homes," according to the Urban Institute.
"Limited financing options for lower cost homes adds a huge barrier to families who could otherwise afford these homes. Lender economics are tricky at this price point—high fixed costs and reduced revenue over the life of the loan make it harder to make a profit."
According to the report, if the small-dollar mortgage mortgage market was expanded across the US, hundreds of thousands of households would be able to purchase a home. This includes homes that may need renovating.
"Unleashing market innovation could create consumer-friendly products and lead to a robust micro-mortgage market in America," according to the report.
To learn more about how small-dollar mortgages could help combat the housing affordability problem, click on the image above.
