The 2 Myths Holding Back Home Buyers

Dated: June 10 2019

Views: 168

Freddie Mac recently released a report entitled, “Perceptions of Down Payment Consumer Research.” Their research revealed that,

“For many prospective homebuyers, saving for a down payment is the largest barrier to achieving the goal of homeownership. Part of the challenge for those planning to purchase a home is their perception of how much they will need to save for the down payment…

…Based on our recent survey of individuals planning to purchase a home in the next three years, nearly a third think they need to put more than 20% down.”

Myth #1: “I Need a 20% Down Payment”

Buyers often overestimate the funds needed to qualify for a home loan. According to the same report:

22% of renters and 31% of homeowners believe lenders require 20% or more of a home’s sale price as a down payment for a typical mortgage today. And,

“If a 20% down payment was required, 70% of those who were planning to buy a home in the next three years said it would delay them from purchasing and nearly 30% indicated they would never be able to afford a home.”  

While many believe at least 20% down is necessary to buy the home of their dreams, they do not realize programs are available which permit as little as 3%. Many renters may actually be able to enter the housing market sooner than they ever imagined!

Myth #2: “I Need a 780 FICO® Score or Higher to Buy”

Many either don’t know or are misinformed concerning the FICO® score necessary to qualify, believing a ‘good’ credit score is 780 or higher.

To debunk this myth, let’s take a look at Ellie Mae’s latest Origination Insight Report, which focuses on recently closed (approved) loans.2 Myths Holding Back Home Buyers | MyKCMAs indicated in the chart above, 52.4% of approved mortgages had a credit score of 600-749.

Bottom Line

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.

Blog author image

Curtis Johnson

Curtis is a Best Selling Author, the Founder and CEO of The Curtis Johnson Team Powered By eXp Realty, where he runs a dynamic Real Estate Team having sold 5,000 residential homes. The Wall Street Jou....

Latest Blog Posts

Waiting To Buy a Home Could Cost You [INFOGRAPHIC]

Some HighlightsIf you’re thinking of buying a home but wondering if waiting a few years will save you in the long run, think again.The longer the wait, the more you’ll pay,

Read More

Home Sellers: There Is an Extra Way To Welcome Home Our Veterans

Some veterans are finding it difficult to obtain a home in today’s market. According to the National Association of Realtors (NAR):“Conventional conforming

Read More

4 Reasons the End of Forbearance Will Not Lead to a Wave of Foreclosures

With forbearance plans about to come to an end, many are concerned the housing market will experience a wave of foreclosures like what happened after the housing bubble 15 years ago. Here are four

Read More

Pop Quiz: Can You Define These Key Terms in Today’s Housing Market? [INFOGRAPHIC]

Some HighlightsThe language of buying and selling a home may sound scary at first, but knowing how key terms relate to today’s market can help you. For example, current low mortgage

Read More