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”
Many Americans 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. Most believe that they need at least 20% down to buy their first home, but programs are available that allow buyers to 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 Better to Qualify”
The survey revealed that 59% of Americans either don’t know (54%) or are misinformed (5%) about what FICO® score is necessary to qualify for a mortgage. Many Americans believe a ‘good’ credit score is 780 or higher. To help debunk this myth, we’ve taken a look at Ellie Mae’s latest Origination Insight Report, which focuses on recently closed (approved) loans. The report shows that 52.2% of recently closed loans were originated with borrowers who had credit scores between 600 and 750.
What To Do With Your New Found Knowledge…
One of the many advantages of working with a local real estate professional is that many have relationships with lenders who will be able to help you with this process. Talking to a lender and getting pre-approved is a really important next step. Not only does it help direct your course of action, it also lets you know your price range for “house-hunting” and helps you feel more confident in the process.
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. Reach out to us to talk with one of our Buyer Specialists who can help you evaluate your ability to buy today or plan for the near future.
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