Headquartered in Detroit Rocket Mortgage A 2-1 temporary home purchase program paid for by a lender was launched on Monday for low-income households.
The program, called Welcome Home RateBreak, is available to buyers purchasing a single-family home whose income is 80 percent or less of the Area Median Income (AMI). Rocket estimates the size of this group to be more than 90 million people.
This product is available through Rocket Mortgage and its wholesale division Rocket Professional TPOthe loan limit is $350,000. It is funded by Rocket through an escrow account that will cover the difference between the reduced payments and the amount payable at the full note rate. The product is sold in all 50 states.
“Some people have a down payment, but they just don’t like the interest rates. They’re waiting for interest rates to come down, and we think, ‘Why don’t we help them ease into housing? “We can give them a significantly reduced interest rate and we will fund the difference. rocket companysaid in an interview house line.
For example, a homebuyer with a $250,000 loan with an interest rate of 6.99% would typically pay $1,661 per month. With Welcome Home RateBreak, their first-year interest rate will be 4.99%, reducing their payment to $1,340. The second year, the tax rate is 5.99% and the payment is $1,497. Thereafter, the repayment interest rate on the remaining loans reverts to 6.99%. According to Rocket, this buyer will save more than $5,800 over two years of purchase.
Rocket has been launching a range of mortgage products to address affordability issues, including ONE+, a 1% down payment home loan program launching in May 2023.
Through ONE+, buyers with incomes at or below 80% of AMI pay just 1% of the purchase price down, and Rocket pays the remaining 2% needed to meet the required threshold for a conventional loan.
The program also waives borrowers’ monthly mortgage insurance premiums, which are traditionally required if buyers put down less than 20 percent of the purchase price.
Rocket originated $24.6 billion in mortgage loans in the second quarter of 2024, up from $20.2 billion in the previous quarter and $22.3 billion in the second quarter of 2023. dollars, down from a profit of $291 million in the first quarter of 2024, as expenses increased compared to revenue in the period.
During the company’s second-quarter 2024 earnings call, executives expected the mortgage market to be challenging in the coming months, in large part due to regulatory changes, lower affordability levels and industry consolidation.
