An article written by Fannie Mae’, “What Consumers (Don’t) Know About Mortgage Qualification Criteria,” illustrated that only 5 to 16 percent of those surveyed know the correct ranges for required mortgage qualification criteria when buying a home.
Myth #1: “20% Down Payment is required”
Fannie Mae’s survey showed that buyers overestimate the amount of required down payment cash to qualify for a home mortgage. The report showed that 76% of Americans either don’t know or are misinformed about the required down payment.
Many buyers think they need at a minimum 20% down to purchase their dream home, but there are several loan programs that let buyers put down, often times, as little as 3%.
Here are the results of a Digital Risk survey. This surveyed Millennials who had recently bought a home.
It shows that 64.2% were able to buy their home by putting down much less than 20%. 43.8% put down less than 10%!
Myth #2: “A 780 FICO Score or Higher is Required to Buy”
The survey Showed 59% of the public either don’t know or are misinformed about what FICO score is required to qualify for a home mortgage.
Many believe a credit score is 780 or higher is “Good”.
In an attempt to debunk this myth, let’s eximine Ellie Mae’s latest Origination Insight Report, which concentrates on recently closed home loans. You can see below that 54.7% of approved mortgages had a credit score between 600 and 749.
Regardless if you are a first time home buyer or purchasing your dream home, Educating yourself on your options will make the mortgage application process quicker and easier. Your dream home is right around the corner!
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