Unison Home Ownership Investors, a provider of home ownership investments, and Valley National Bank, the wholly-owned subsidiary of Valley National Bancorp, announced the launch of their 5% down payment program.
The 5% down program will be given in conjunction with an 80% loan-to-value mortgage. The companies announced this will provide buyers with short and long-term savings.
The program works by allowing homebuyers to put down 5%, while Unison invests 15%, allowing the buyer to take out an 80% LTV loan. Unison would then share the changing home values – thereby profiting if the value increases and losing money if it decreases.
“With Valley National Bank, this first of its kind five percent down payment program opens the residential real estate market to more potential buyers,” Unison chairman and CEO Thomas Sponholtz said. “By partnering with buyers and investing alongside them in their down payment, we liberate them from the burden of taking on too much debt and put them in a stronger position for success.”
The companies point out the homebuyer would receive several benefits from this loan program including not having to purchase private mortgage insurance, lower monthly payments, increased purchasing power and the ability to keep more cash on hand.
“Buying a home is one of the biggest decisions made in a person’s lifetime, and we are always looking for new, innovative ways to increase accessibility to home ownership,” said Kevin Chittenden, Valley executive vice president and chief residential lending officer. “We chose to work with Unison because they share in our mission to help make the process a straightforward as possible for the buyer.”
“Through this 5% down payment program, not only are we helping more people purchase their dream homes, but we’re taking a major step forward for the home financing industry,” Chittenden said.
Of course, this program could do more harm than good for buyers in markets where home prices are quickly appreciating. Some cities, such as Seattle, Las Vegas and San Francisco, reported the highest annual gains among the nation’s top 20 cities with increases of 12.7%, 10.6% and 9.1% respectively.
This program is currently available in New York, New Jersey, and Pennsylvania, with plans for further regional expansion in 2018.