One of the largest misconceptions that potential borrowers have about buying a home is that it’s too tough to qualify for a mortgage.
Qualification can be a lengthy process, to be sure, but it isn’t impossible by any stretch.
Think about it this way…people buy homes every day, and many borrowers don’t have the perfect situations.
Erik J. Martin from The Mortgage Reports has put together an interesting piece that I’ve linked to here. I highly recommend you take a look at it – and I’ve summarized some of it in this article.
Don’t Overthink the Perceived Difficulty
Believe it or not, most potential borrowers with a reliable job, that have regular income, and average credit can most likely qualify for a mortgage. Of course, there are specific regulations that must be met, but qualification isn’t as tough as many might think.
Interestingly, many potential buyers willing to own a home don’t even try to qualify for a mortgage. Many believe that rigid mortgage requirements will disqualify them.
Per Martin’s article: “new research indicates that consumers think it’s harder to qualify for a mortgage loan than it actually is. And many lack the facts and know-how to properly pursue home financing.”
He continues: “don’t rule out buying a home because you think you’re ineligible for a loan. Chances are that, armed with knowledge and the right guidance, you can buy that home you’ve been thinking about.”
Report: Consumers believe guidelines are tougher than they really are
Martin references the study from Fannie Mae that recently polled 3,000 consumers about their understanding of mortgage requirement rules. Some findings were surprising:
- Only 11 percent were aware that the minimum FICO credit score needed to obtain a mortgage is 580. Most thought it was 650.
- Over 40 percent didn’t know their own credit score.
- Most people think you need to put down at least 10 percent for a down payment. The truth is, the median is 3 percent; some programs don’t even require a down payment.
- Only 23 percent of respondents were aware that low down payment programs are available.
- Over three in five didn’t know that the debt-to-income ratio lenders don’t want total debt payments to exceed is 50 percent.
- Only 12 percent of homeowners and 9 percent of renters were able to identify the correct credit score range needed to qualify for a mortgage.
- The top five reasons cited for expected difficulty in getting a
mortgage were
- Insufficient income (chosen by 23% of respondents)
- Too much debt (17%)
- Insufficient credit score/credit history (15%)
- Affording the down payment or closing costs (14%)
- Lack of job security/stability (9%)
One more thing regarding those who would rather rent than buy…the report intimates that these are the people are most unclear about mortgage requirements.
My guess is that this uncertainty is holding them back from learning more details or reaching for a goal that seems to difficult.
Give it a Try!
More often than not, there are two things get in the way of buyers seeking a mortgage: their own fears and lack of info about mortgage requirements.
There are many things potential borrowers can do – one of the first is finding out your FICO credit score. You can find more on that here….
Most importantly, reach out to a trustworthy lender and go through the mortgage application process.
When talking with your lender, make sure to ask about different loan options – and find out what you qualify for. Learn what your minimum down payment and credit score need to be.
Determine how much you’ll pay monthly and over the course of a given loan. Your lender can also talk with you about the particular requirements for that particular loan.
Please do reach out to me, as it would be my pleasure to help!
