Let’s start today off with breaking the myths that may be holding you back from buying! After reading an article by Fannie Mae on “What Consumers (don’t) Know About Mortgage Qualification Criteria”, it was interesting to see that “only 5 to 16 percent of respondents know the correct ranges for key mortgage qualification criteria.” Let’s work to break apart the two most common myths out there, and help you to understand why this may be the best time to buy a home, and why you might be more qualified than you think!
Myth #1: “I Need a 20% Down Payment”
Fannie Mae‘s survey revealed that consumers overestimate the down payment funds needed to qualify for a home loan. According to the report, 76% of Americans either don’t know or are misinformed about the minimum down payment required. Many believe that they need at least 20% down to buy their dream home, but many programs actually let buyers put down as little as 3%.
Below are the results of a Digital Risk survey of Millennials who recently purchased a home. As you can see, 64.2% were able to purchase their home by putting down less than 20%, with 43.8% putting down less than 10%!
Myth # 2: “I Need a 780 FICO® Score or Higher to Buy”
The survey revealed that 59% of Americans either don’t know or are misinformed 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 look at Ellie Mae’s latest Origination Insight Report, which focuses on recently closed (approved) loans. As you can see in the image below, 54.7% of approved mortgages had a credit score of 600-749.
The bottom line is that whether you are 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, you just need to ask your favorite lender where you stand! We hope that we have helped in breaking the myths surrounding home ownership, and would love to help you find the home of your dreams!