In a recent article from Realtor.com, “Home Buyers’ Top Mortgage Fears: Which One Scares You?” it is mentioned 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”
The down payment amount needed to get a home loan is overestimated by buyers. According to the First Quarter 2017 Homeownership Program Index (HPI) from Down Payment Resource, saving for a down payment helped hold back home buyers, 70% of renters, from buying.
Rob Chrane, CEO of Down Payment Resource said this,
“There are many mortgage-ready renters today, but they don’t know it. Often, homebuyers remain sidelined for years due to the down payment.”
Too many buyers believe that they need a minimum of 20% down to buy their dream home, but programs are available now that allow buyers to put down as little as 3%. Renters are able to enter the housing market sooner than they thought with the new programs that have emerged needing less cash out of pocket. These great programs will not hold back home buyers to get into their dream home.
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. This can hold back home buyers from making a purchase.
A lot of buyers believe a ‘good’ credit score is 780 or higher.
To help get rid of 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.
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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