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Wells Fargo & Company (WFC - Free Report) launched a new affordable mortgage program that allows the customers to make a down payment of just 3% for fixed-rate mortgages.
Targeting first-time homebuyers and low-to moderate-income consumers, the new program, ‘yourFirstMortgage’ includes a key feature – it requires a minimum credit score of only 620 on a typical scale of 300 to 850. Among other features, it allows the borrowers to include income from family members, tuition and utility bill payments or renters to qualify for the loan.
Also, by completing a homebuyer education course, a borrower with a down payment of less than 10% may receive one-eighth percentage interest rate reduction.
Brad Blackwell, executive vice president, Wells Fargo Home Lending mentioned, “There are a lot of conventional loan products with low down payment options, but the criteria are so complex that it creates barriers for many qualified borrowers. Blackwell further added, “With yourFirst Mortgage, we wanted to provide access to credit and simplify the experience while maintaining responsible lending practices.”
Interestingly, the new loan program partnered with Fannie Mae (FNMA - Free Report) and Self-Help, is offering mortgage that is not obtained under a government program such as Federal Housing Administration program (FHA).
Several banks are retreating from government mortgage insurance programs as they continue to come under scrutiny of Department of Justice while struggling with numerous lawsuits over claims of poor underwriting. Wells Fargo, too, has reduced its FHA-backed mortgage lending in recent times. Citing Inside Mortgage Finance data, a report by The Wall Street Journal stated that the bank’s loans accounted for just 2.5% of total FHA mortgage dollars originated in 2015, declining from 9% in 2013 and substantially down from 13% in 2010.
Other lenders too have begun providing non-FHA mortgages with low down payment options. Earlier this February, Bank of America Corporation (BAC - Free Report) , in partnership with Self-Help Ventures Fund and Freddie Mac (FMCC - Free Report) had commenced offering mortgages requiring 3% down payment.
The latest move by Wells Fargo comes at a time when the housing market seems to be showing signs of robust improvement. Notably, new home sales hit a more than eight-year high in April. Also, home prices surged to record levels, signaling strong demand in the all-important spring selling season. Amid such backdrop, with its new loan program, the nation’s largest mortgage lender should be able to reap benefits.
Wells Fargo currently carries a Zacks Rank #3 (Hold).
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Wells Fargo (WFC) Launches Affordable Non-FHA Mortgages
Wells Fargo & Company (WFC - Free Report) launched a new affordable mortgage program that allows the customers to make a down payment of just 3% for fixed-rate mortgages.
Targeting first-time homebuyers and low-to moderate-income consumers, the new program, ‘yourFirstMortgage’ includes a key feature – it requires a minimum credit score of only 620 on a typical scale of 300 to 850. Among other features, it allows the borrowers to include income from family members, tuition and utility bill payments or renters to qualify for the loan.
Also, by completing a homebuyer education course, a borrower with a down payment of less than 10% may receive one-eighth percentage interest rate reduction.
Brad Blackwell, executive vice president, Wells Fargo Home Lending mentioned, “There are a lot of conventional loan products with low down payment options, but the criteria are so complex that it creates barriers for many qualified borrowers. Blackwell further added, “With yourFirst Mortgage, we wanted to provide access to credit and simplify the experience while maintaining responsible lending practices.”
Interestingly, the new loan program partnered with Fannie Mae (FNMA - Free Report) and Self-Help, is offering mortgage that is not obtained under a government program such as Federal Housing Administration program (FHA).
Several banks are retreating from government mortgage insurance programs as they continue to come under scrutiny of Department of Justice while struggling with numerous lawsuits over claims of poor underwriting. Wells Fargo, too, has reduced its FHA-backed mortgage lending in recent times. Citing Inside Mortgage Finance data, a report by The Wall Street Journal stated that the bank’s loans accounted for just 2.5% of total FHA mortgage dollars originated in 2015, declining from 9% in 2013 and substantially down from 13% in 2010.
Other lenders too have begun providing non-FHA mortgages with low down payment options. Earlier this February, Bank of America Corporation (BAC - Free Report) , in partnership with Self-Help Ventures Fund and Freddie Mac (FMCC - Free Report) had commenced offering mortgages requiring 3% down payment.
The latest move by Wells Fargo comes at a time when the housing market seems to be showing signs of robust improvement. Notably, new home sales hit a more than eight-year high in April. Also, home prices surged to record levels, signaling strong demand in the all-important spring selling season. Amid such backdrop, with its new loan program, the nation’s largest mortgage lender should be able to reap benefits.
Wells Fargo currently carries a Zacks Rank #3 (Hold).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>