In Realtor.comâ€™s recent article, â€œHome Buyersâ€™ Top Mortgage Fears: Which One Scares You?â€? they mention that â€œ46% of potential home buyers fear they wonâ€™t qualify for a mortgage to the point that they donâ€™t even try.â€?
Myth #1: â€œI Need a 20% Down Paymentâ€?
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,
â€œThere are many mortgage-ready renters today, but they donâ€™t know it. Often, homebuyers remain sidelined for years due to the down payment.â€?
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: â€œI Need a 780 FICOÂ® Score or Higher to Buyâ€?
The survey revealed that 59% of Americans either donâ€™t know (54%) or are misinformed (5%) about what FICOÂ® score is necessary to qualify.
Many Americans believe a â€˜goodâ€™ credit score is 780 or higher.
To help debunk this myth, letâ€™s take a look at Ellie Maeâ€™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.
Source: Keeping Current Matters