Many Americans are still confused about what is required to qualify for a home loan (mortgage) in today’s market.
A recent survey by Ipsos revealed there are two major misconceptions…
Down Payment
Many consumers think they need 20% down payment in order to buy a house. In fact, 40% of those surveyed confirmed they overestimate the funds needed to qualify for a mortgage. In reality, there are many loans made today with a down payment of 3% or less.
Many potential buyers, whether they be renters or homeowners today, are still saving their money before making a move. The fact is they could enter the housing market sooner with new loan programs that allow for much less cash out of pocket.
FICO® Scores
More than 60% of all survey respondents believe they need excellent credit to buy a home, when less than 12% of home buyers actually had excellent credit (over 800). Most buyers had good credit and survey respondents thought good credit started at 780, when in reality it’s 750-800. In fact, FHA mortgages closed with an average credit score of 686.
The average across all loans closed in February was 720. The chart at the top illustrates the distribution of FICO® Scores for all loans approved in February.
Bottom Line
If you are a prospective buyer who is ‘ready’ and ‘willing’ to act now, but are not sure if you are ‘able’ to, let’s sit down to help you understand your true options.
