Buying a home

Debunking Some Mortgage Myths

IMG_7290There’s a disconnect between what the public believes to be needed and what is actually needed to qualify for a residential home loan.

In a recent survey two-thirds of those surveyed believe they need a very good credit score to buy a home, with 45% thinking a “good credit score” is over 780.

Consumers overestimate the down payment funds needed to qualify for a home loan, with 36% thinking a 20% down payment is always required.

However, according to American Enterprise Institute’s International Center on Housing Risk’s May First-Time Buyer Mortgage Risk Index (FBMRI), reality is far from perception. The report reveals:

• 70% of first-time buyer mortgages had a combined loan-to-value ratio of 95% or higher.

• About 20% of first-time buyers taking out mortgages had a FICO score below 660.

• 25% had total debt-to-income ratios above 43%.

• The median first-time buyer with an agency mortgage made a down payment of only 3% or $7200 in dollar terms.

•The median FICO score for first-time buyers with agency mortgages was 705.

• For first-time buyers with FHA-insured loans, the median FICO score was only 672

These numbers contradict the frequent claims that first-time buyers face difficulties in obtaining mortgages.

If you’d like to chat about your specific situation to see if you’re in a position to buy a home, please give me call. I can help. 793-963-0142 or 301-320-8349. Email robyn@robynporter.com.

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