In Realtor.com’s recent article,
“Home Buyers’ Top Mortgage Fears: Which One Scares You?” they mention
that “46% of potential home buyers fear they won’t qualify for a mortgage
to the point that they don’t even try.”
Myth #1: “I
Need a 20% Down Payment”
Buyers
overestimate the down payment funds needed to qualify for a home loan.
According to the First Quarter 2017
Homeownership Program Index (HPI) from Down
Payment Resource, saving for a down payment was the barrier that
kept 70% of renters from buying. Rob Chrane, CEO of Down
Payment Resource had this to say,
“There
are many mortgage-ready renters today, but they don’t know it. Often,
homebuyers remain sidelined for years due to the down payment.”
Many
believe that they need at least 20% down to buy their dream home, but programs
are available that allow buyers put down as little as 3%. Many renters may
actually be able to enter the housing market sooner than they ever imagined
with new programs that have emerged allowing less cash out of pocket.
Myth #2: “I
Need a 780 FICO® Score or Higher to Buy”
The
survey revealed that 59% of Americans either don’t know (54%) or are
misinformed (5%) about what FICO® score is necessary to qualify. Many Americans
believe a ‘good’ credit score is 780 or higher. To help debunk this myth, let’s
take a look at Ellie Mae’s latest Origination Insight Report,
which focuses on recently closed (approved) loans.
As you can see in the
chart above, 53.2% of approved mortgages had a credit score of
600-749.
Bottom Line
Whether
buying your first home or moving up to your dream home, knowing your options
will make the mortgage process easier. Your dream home may already be within
your reach.
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