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.
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!