Two Common Myths About Home Buying

The saying, “Don’t believe everything you hear,” is rarely truer than when buying a home. Common myths you’ve heard could potentially mislead you, so we would like to break down two of the most common home-buying myths in order to make your home buying experience an enjoyable one.

Consumers often think they need to put more money down to purchase a home than is actually required. In a 2017 survey, 68% of renters cited saving for a down payment as an obstacle to homeownership. Thirty-nine percent of renters believe that more than 20% is needed for a down payment and many renters are unaware of low–down payment programs.

Let’s break down two of the most common myths:

Myth #1: “I Need a 20% Down Payment”

Buyers often overestimate the down payment funds needed to qualify for a home loan. Most potential homebuyers are largely unaware that there are low-down payment and no-down payment assistance programs available at the local, state, and federal levels to help eligible borrowers secure an affordable down payment.

These numbers do not differ much between non-owners and homeowners. For example, 30% of homeowners and 39% of renters believe that you need more than 20 percent for a down payment.

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 ever imagined with programs that have emerged allowing less cash out of pocket.

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.

Many Americans believe 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 in the chart above, 51.7% 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.

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Give us a call! We’d be honored to assist you in selling your home, as well as finding your next one. Remember, at any price in any neighborhood, The Robinson Team sells homes!

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Our agents write often to give you the latest insights on owning a home or property in the Chattanooga Metro Area area.

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