2 Myths That May Be Holding You Back From Buying
There are many misconceptions about buying a home that are believed to be true. Let’s take a look at two of the more common ones that may be holding you back from buying today.
Myth #1: “I Need a 20% Down Payment”
Buyers often overestimate the down payment funds needed to qualify for a home loan. Freddie Mac recently published an article entitled, “Debunking the 20% Down Myth,” which revealed that “the average down payment for first-time homebuyers in 2017 was 5%, and 10% for repeat buyers.”
While many believe that they need at least 20% down to buy their dream homes, they do not realize that there are programs available which allow them to put down as little as 3%. Many renters may actually be able to enter the housing market sooner than they had ever imagined with programs that have emerged allowing less cash out of pocket.
According to the same article:
“Many potential buyers are unaware of the fact that their down payment can come from sources other than personal savings. Some mortgage products let you use gifts from your family or employer. Others let you use grants or loans from non-for-profit or government agencies.”
Myth #2: “I need a 780 FICO® Score or Higher to Buy”
Similar to the down payment, many either don’t know or are misinformed about what FICO® score is necessary to qualify for a home loan.
Many Americans believe that a ‘good’ credit score is 780 or higher.
To help debunk this myth, let’s take a look at Ellie Mae’s latest Origination Insight Report which focuses on recently closed (approved) loans.
As you can see, 52.7% of approved mortgages had a credit score of 600-749.
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.
Information provided by Benchmark Mortgage