New Program to Assist New Homeowners
Blue Federal Credit Union has launched a new and game-changing, no-money-down mortgage program. This one-of-a-kind program is available credit-union-wide to all qualifying members.
With rising home prices, people who otherwise could afford a home (mortgage payments, insurance, and taxes) sometimes have difficulty saving for a 20% down payment. To combat this obstacle, Blue has a twofold plan.
The first unique part of the program is that first-time home buyers can obtain 100% financing on a home. This program is designed to aid first-time homebuyers in buying a home without the need to pay Private Mortgage Insurance (PMI) or have large savings for a down payment.
The second unique part of this program is the crowdfunding component. Qualified members of Blue can pledge into the program, and in turn, these pledged funds will cover the down payments and earn higher interest yields for the pledgers.
“The No Money Down Mortgage at Blue brings you one step closer to homeownership at a time when it is harder than ever to save for a down payment,” says Jason Buchanan, Chief Credit & Risk Officer. “We know that this program will help our members compete with cash offers that can often go above the asking price.”
To remain impartial and fair, Blue has partnered with great real estate agents who identify potential borrowers who would fit the criteria for this pilot program. Once a potential home buyer has been identified, they are subject to Blue’s high underwriting standards to receive a mortgage with 100% financing.
On the pledgers’ side, funds are deposited into a five-year term share. The funds will then be combined with other pledgers to provide additional collateral for the mortgage loans in this pilot program. Pledgers are rewarded for their community good with an interest rate that adjusts monthly based on the Prime Rate minus 1.25%. In addition, pledgers can withdraw the interest earned throughout the five-year term.
“As good as this product is for members seeking to purchase a home, it is equally attractive for members looking to earn competitive interest on their deposits,” states Buchanan. “When you pledge your deposits into this program, not only are you helping someone in our community purchase a home, you’ll also earn an above-market interest rate that moves with the prime rate – a rare opportunity in today’s economy.”
Blue wants to be the lifelong champion of our members by creating community connections and transforming the financial services experience. This groundbreaking program seeks to position Blue as an irreplaceable co-pilot and ties directly into the spirit of the foundation of the credit union movement with members helping members.
Buchanan ended by saying, “Even in a challenging and ever-changing real estate market, we are doing our best to help members discover pathways to realize the possibility of homeownership.”