The Aspiring Home Buyers Profile from the National Association of Realtors (NAR) found that the American public is still somewhat confused about what is required to qualify for a home mortgage loan in today’s housing market. The results of the survey show that non-homeowners cite it as the main reason for not currently owning a home, as not being able to afford one. This brings us to two major misconceptions that we want to address today.
1. Down Payment
NAR’s survey revealed that consumers overestimate the down payment funds needed to qualify for a home loan. According to the report, 39% of non-homeowners say they believe they need more than 20% for a down payment on a home purchase. In actuality, there are many loans written with a down payment of 3% or less. If you will be a First Time Home Buyer there are even more programs available to you such as Rhode Island Housings 100% financing program. You may even qualify for a $7,500 down payment assistance which could give you the potential to buy a home without bringing any money to the closing table. Many renters may actually be able to enter the housing market sooner than they ever imagined with new programs that have emerged allowing less cash out of pocket.
Feel free to contact us at 401-949-5400 and we will give you our opinion on which type of loan may be best for you.
2. FICO® Scores
An Ipson survey revealed that 62% of respondents believe they need excellent credit to buy a home, with 43% thinking a “good credit score” is over 780. In actuality, the average FICO® scores of approved conventional and FHA mortgages are much lower.
The average conventional loan closed in August had a credit score of 752, while FHA mortgages closed with a score of 683. The average across all loans closed in August was 724. The chart below shows the distribution of FICO® Scores for all loans approved in August.
Bottom Line
If you are a prospective buyer who is ‘ready’ and ‘willing’ to act now, but are not sure if you are ‘able’ to, let’s sit down to help you understand your true options. Give us a call at 401-949-5400 or fill out our Contact Form.
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