2 Myths Holding Back Home Buyers

Freddie Mac recently released areport entitled, “Perceptions of Down PaymentConsumer Research.” Their research revealedthat,

“For many prospective homebuyers, saving for a downpayment is the largest barrier to achieving the goal ofhomeownership. Part of the challenge for those planning to purchasea home is their perception of how much they will need to save forthe down payment…

…Based on our recent survey of individuals planningto purchase a home in the next three years, nearly a third thinkthey need to put more than 20% down.”

Myth #1: “I Need a 20% DownPayment”

Buyers often overestimate the funds needed to qualify for a homeloan. According to the same report:

22% of renters and 31% of homeowners believe lenders require 20%or more of a home’s sale price as a down payment for atypical mortgage today. And,

“If a 20% down payment was required, 70% of those whowere planning to buy a home in the next three years said it woulddelay them from purchasing and nearly 30% indicated they wouldnever be able to afford a home.”  

While many believe at least 20% down is necessary to buy the home oftheir dreams, they do not realize programs are available whichpermit as little as 3%. Many renters may actually be able to enterthe housing market sooner than they ever imagined!

Myth #2: “I Need a 780 FICO® Score or Higherto Buy”

Many either don’t know or are misinformed concerning theFICO® score necessary to qualify, believing a‘good’ credit score is 780 or higher.

To debunk this myth, let’s take a look at EllieMae’s latest Origination InsightReport, which focuses on recently closed(approved) loans.

As indicated in the chart above, 52.4% of approvedmortgages had a credit score of 600-749.

Bottom Line

Whether buying your first home or moving up to your dream home,knowing your options will make the mortgage process easier. Yourdream home may already be within your reach.