There seems to be a growing chasm between what the public believes to be needed and what is actually needed to qualify for a residential home loan. A recentsurveyby Ipsos reported that:
Two-thirds of those surveyed believe they need a very good credit score to buy a home, with 45 percent thinking a“good credit score”is over 780.
Consumers overestimate the down payment funds needed to qualify for a home loan, with 36 percent thinking a 20 percent down payment is always required.
However, according toAmerican Enterprise Institute's International Center on Housing Risk’sMayFirst-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 percent
The median first-time buyer with an agency mortgage made a down payment of only 3 percent, 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.
Stephen Oliner, co-director ofAEI’s International Center on Housing Riskexplained the reality of the situation.
“One hears all the time that first-time buyers have limited access to mortgage debt. But this isn’t true. Many first-time buyers with low FICO scores and little money down are buying homes every month.”
Call Dawn Borkowski, The Lawton Team of Keller Williams Realty for more information and guidance, (864) 313-4608 or [email protected]
Author:Dawn Borkowski Phone: 864-313-4608 Dated: July 9th 2015 Views: 407 About Dawn: ...
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