Perceptions or Reality?
Two Myths that are Quite Confusing to First-time Homebuyers
Whether or not you have student loan debt, chances are, after about 2-3 years in your post-graduate job, you’re ready to start thinking of owning your own home. Two very common myths that seem to give most new buyers pause, were recently addressed by a report from Freddie Mac, “Perceptions of Down Payment Consumer Research.”
As we have addressed with our first time homebuyers in the past, their research concluded similarly, “Saving for a down payment is the largest barrier to achieving the goal of homeownership.” If you are like a large number of homebuyers, you believe that you need to put more than 20% down and you have to have a FICO® (credit) score of over 750 - in fact, nearly a third of homebuyers believe this.
Now, let’s debunk these two myths:
Myth #1: “I Need a 20% Down Payment”
Buyers often overestimate the funds needed to qualify for a home loan. While many homebuyers still believe at least 20% down is required to buy the home of their dreams, they do not realize that there are programs available which require as little as 3% down. Sadly, not knowing this valuable information, has kept many renters from entering the housing market. You may actually be able to enter the housing market sooner than you ever imagined!
Myth #2: “I Need a 780 FICO® Score or Higher to Buy”
Thanks to the media, who often love putting people in ‘panic’ mode, MANY Americans believe that to be true. The truth about the FICO® score necessary to qualify is likely far less than you think.
The proof is in Ellie Mae’s latest Origination Insight Report, which focuses on recently closed loans for homebuyers purchasing their dream homes. As indicated in the chart above, 52.4% 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.
Here are a few cold, hard facts:
- The average credit score of approved loans was between 600 - 749 last month.
- 72% of buyers who purchased homes this year have put down less than 20%.
- 76.4% of loan applications were approved last month.
Don’t let common myths stop you dead in your tracks! Buy now while interest rates are still quite low. Heard any other myths you would like debunked? Let’s talk! Call or text me at (704) 491-3310.
© Debe Maxwell | The Maxwell House Group | RE/MAX Executive | CharlotteBroker@icloud.com | Perceptions or Reality? Two Myths that are Quite Confusing to First-time Homebuyers