Many potential homebuyers believe that they need a 20% down payment and a 780 FICO® score to qualify to buy a home, which stops many of them from even trying! Here are some facts:
- 40% of millennials who purchased homes this year have put down less than 10%.
- 76.4% of loan applications were approved last month.
- The average credit score of approved loans was 724 in September.
The Aspiring Home Buyers Profile from the National Association of Realtors (NAR) found that the American public is still somewhat confused about what is required to qualify for a home mortgage loan in today’s housing market. The results of the survey show that non-homeowners cite the main reason for not currently owning a home, as not being able to afford one.
This brings us to two major misconceptions that we want to address today.
1. Down Payment
NAR’s survey revealed that consumers overestimate the down payment funds needed to qualify for a home loan. According to the report, 39% of non-homeowners say they believe they need more than 20% for a down payment on a home purchase. In actuality, there are many loans written with a down payment of 3% or less.
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.
2. FICO® Scores
An Ipson survey revealed that 62% of respondents believe they need excellent credit to buy a home, with 43% thinking a “good credit score” is over 780. In actuality, the ...
According to a survey conducted by ClosingCorp, over half of all homebuyers are surprised by the closing costs required to obtain their mortgage.
After surveying 1,000 first-time and repeat homebuyers, the results revealed that 17% of homebuyers were surprised that closing costs were required at all, while another 35% were stunned by how much higher the fees were than expected.
“Homebuyers reported being most surprised by mortgage insurance, followed by bank fees and points, taxes, title insurance and appraisal fees.”
Bankrate.com gathered closing cost data from lenders in every state and Washington, D.C. in order to share the average costs in each state. The map below was created using the closing costs on a $200,000 mortgage with a 20% down payment.
Keep in mind that if you are in the market for a home above this price range, your costs could be significantly greater. According to Freddie Mac,
“Closing costs are typically between 2 and 5% of your purchase price.”
It is easy to become overwhelmed when you enter the home buying market. Friends, family, colleagues, and even acquaintances will give you their opinions if you are a first time home buyer. While most of them are looking out for your best interest, they are not fully aware of what is happening in the housing market.
It is important for you to be prepared and have your own questions ready. No matter what other opinions you are getting, you are the one buying the home and your comfort level will help make your final decision. Here are three important questions to ask before you purchase a home.
1. Why am I Buying a Home?
Regardless of the finances, it is important to think about what made you want to buy a home in the first place. Usually the reasons don’t have to do with money. Instead, home buyers are focused on how the house will impact their family in the future. A study done by the Joint Center for House Studies at Harvard found there are four reasons people buy a home. Those reasons include schools for your children, a safe environment, more room for your family to grow, and control of your own space.
These factors are the most common reasons people look to buy a new home. When you ask yourself why you are looking to purchase a home, do any of those factors come up? Spend time with your spouse or family members who are involved in this decision and determine why you want a home in the first place. Creating this list will help when searching for a home and can help your real estate agent find the best home for your needs.
2. What is the Trend with Home Values?
Our current economy and housing market is strong. That means home values and mortgage...
The results of countless studies have shown that potential home buyers, and even current homeowners, have an inflated view of what is really required to qualify for a mortgage in today’s market.
One such study by the Wharton School of Business at the University of Pennsylvania revealed that many millennials have not yet considered purchasing homes simply because they don’t believe they can qualify for a mortgage.
A recent article about millennials by Realtor.com explained that:
“About 72% of aspiring millennial buyers said they’re waiting because they can’t afford to buy…”
The article also explained that 29% of millennials believe their credit scores are too low to buy.The problem here is the fact that they think they will be denied a mortgage is keeping them from even attempting to apply.
Ellie Mae’s Vice President Jonas Moe encouraged buyers to know their options before assuming that they won’t qualify for a mortgage:
“Many potential home buyers are ‘disqualifying’ themselves. You don’t need a 750 FICO® Score and a 20% down payment to buy.”
So, what credit score is necessary?
Below is a breakdown of the...
Here are a couple of photos from a condo that I just got into escrow for my client. This upgraded condo is located in Centennial Hills in the Sky Pointe Condominium community. This is a deal that I put together where I represented a seller who got into contract on their property and a new property all within the same week. Many times in real estate you have to be sharp and focused to make these transactions come together.
This new unit is 3 bedroom, 2 bathroom property with a generous 1,255 square footage layout. Some of our favorite features include the rich hard wood flooring, sleek grey cabinetry in the bathrooms and kitchen as well as the premium stainless steel appliances.
If you are looking to sell and buy all within a scheduled deadline, It’s important to connect with an agent with a proven track record. Contact me directly by call or text at 1-702-417-0884 or email: [email protected]