Facts: Freddie Mac research recently revealed that, “For many prospective home buyers, saving for a down payment is the largest barrier to achieving the goal of home ownership. Part of the challenge for those planning to purchase a home is their perception of how much they will need to save for the down payment…based on their recent survey of individuals planning to purchase a home in the next three years, nearly a third think they need to put more than 20% down.”
Myth #1: “I Need a 20% Down Payment”
Buyers often overestimate the funds needed to qualify for a home loan. 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 a typical mortgage today.
And, “If a 20% down payment was required, 70% of those who were planning to buy a home in the next three years said it would delay them from purchasing and nearly 30% indicated they would never be able to afford a home.”
While many believe at least 20% down is necessary to buy the home of their dreams, they do not realize programs are available which permit as little as 3%. Many renters may actually be able to enter the housing market sooner than they ever imagined!
Myth #2: “I Need a 780 FICO® Score or Higher to Buy”
Many people either don’t know or are misinformed concerning the FICO® score necessary to qualify, believing a ‘good’ credit score is 780 or higher.
To debunk this myth, Ellie Mae’s latest Origination Insight Report indicated 52.4% of approved mortgages had a credit score of 600-749. The numbers speak for themselves and the facts matter when it comes to buying your first home.
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.
If home ownership is in your plans for 2019 visit us at hfamiami.com/homebuyers to learn about our first-time home buyers’ mortgage, low interest rates and down payment assistance programs. Note, information in this post was derived from KCM.com.