You Gave Up 🙁
Rent is a transition stage to ownership. It’s no different from having an entry level job out of high school or college – at least that’s how it was designed. Sure the are new barriers to go from rent to ownership, but frankly speaking the biggest barrier is our paralyzing fear of our own credit score. According to Daniel Bortz “46% of potential home buyers fear they won’t qualify for a mortgage to the point that they don’t even try [to look at and/or monitor their credit].”
To better understand how credit works in the most basic terms. Let’s take a quick look how “street credit” works. Here’s Rolando Castro – a Credit Coach in Los Angeles who just nails it!
Mythbuster: Go from Renting to Owning.
Myth #1: “I Need a 20% Down Payment”
Buyers overestimate the down payment funds needed to qualify for a home loan. According to the First Quarter 2017 Homeownership Program Index (HPI) from Down Payment Resource, saving for a down payment was the barrier that kept 70% of renters from buying.
Rob Chrane, CEO of Down Payment Resource had this to say,
“There are many mortgage-ready renters today, but they don’t know it. Often, homebuyers remain sidelined for years due to the down payment.”
Many believe that they need at least 20% down to buy their dream home, but programs are available that allow buyers put down as little as 3%. 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.
Myth #2: “I Need a 780 FICO® Score or Higher to Buy”
The survey revealed that 59% of Americans either don’t know (54%) or are misinformed (5%) about what FICO® score is necessary to qualify.
Many Americans believe a ‘good’ credit score is 780 or higher.
To help debunk this myth, let’s take a look at Ellie Mae’s latest Origination Insight Report, which focuses on recently closed (approved) loans.
As you can see in the chart above, 53.2% of approved mortgages had a credit score of 600-749. That’s MOST of Americans!
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.
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