Ninety-three percent of American adults believe that owning a home is part of the American dream, and 81% believe that owning a home increases financial stability, according to a recent survey. Unfortunately, many Americans have misconceptions about what is necessary to be able to purchase a home.
Unfortunately there are a lot of myths about what it takes to buy a home and so people go on renting, wasting their opportunity to build real financial security. Let’s do away with the false information and get the facts!
A lie gets halfway around the world before the truth has a chance to get its pants on. Winston Churchill
Here are some misconceptions:
Myth 1: You need a big down payment to buy a home. According to the survey, the average American believes that 17% of the purchase price is the minimum down payment required to buy a home.
Fact: It’s true that a 20% down payment is the mortgage industry standard, but it is by no means a minimum requirement. A conventional mortgage can be obtained with a down payment of as little as 3% by creditworthy borrowers, and even lower-credit applicants can obtain an FHA mortgage with a down payment as low as 3.5%.
Myth 2: You need excellent credit to get approved for a mortgage. Seventeen percent of all adults and 22% of millennials say that credit is an obstacle standing in the way of becoming a homeowner. And it’s true that a high credit score certainly helps your chances of approval and can get you a lower interest rate.
Fact: In reality, however, relatively few potential home buyers can’t buy a house because of credit issues alone. The median FICO credit score in the U.S. is 700, while the minimum credit score necessary for a conventional mortgage is just 620. An FHA loan with 3.5% down requires a FICO score of 580, and with a 10% down payment, it’s possible to get an FHA loan with a score of as little as 500.
Myth 3: Student loan debt will prevent you from buying a home. Student loans are a big issue in the U.S., especially for younger Americans. More than half of millennials have student loans, and nearly one in four millennials say that they have delayed buying a home because of their student loan debt.
The idea that student loan debt will prevent you from buying a home is true in some respects, but recent changes to the mortgage qualification guidelines have been implemented specifically to make it easier for student loan borrowers to buy homes.
Rick Cogswell Mortgage is made up of a team of mortgage pros with several decades of combined experience helping people realize their dreams of home ownership. Don’t listen to the rumors and myths, get the facts. Pick up the phone and call us now: 954-734-4440. Seven days a week