No… You Do Not Need 20% Down to Buy NOW!
Pssst. Hey! Did I ever tell you about the time I bought a home for $1,000 down? Nope, it wasn’t a loan shark or hard money or even down payment assistance. It was a creative program with a nationally known bank.
And even more interesting, it was AFTER the crash. Banks had tightened their criteria and most people we’re bringing 5% to closing. But I had other plans for my cash so, I found a program that let me keep my money and buy a house.
Now, no promises that I can find you a program this good, but I’m always on the lookout for cool loan programs for my buyers. I might have something interesting up my sleeve.
While we’re talking about interesting loan programs, let’s talk about some myths that keep buyers from getting into great loans.
The Aspiring Home Buyers Profile from the National Association of Realtors (NAR) found that the American public is still somewhat confused about what is required to qualify for a home mortgage loan in today’s housing market. The results of the survey show that non-homeowners cite the main reason for not currently owning a home, as not being able to afford one.
This brings us to two major misconceptions that we want to address today.
1. Down Payment
NAR’s survey revealed that consumers overestimate the down payment funds needed to qualify for a home loan. According to the report, 39% of non-homeowners say they believe they need more than 20% for a down payment on a home purchase. In actuality, there are many loans written with a down payment of 3% or less.
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.
2. FICO® Scores
An Ipson survey revealed that 62% of respondents believe they need excellent credit to buy a home, with 43% thinking a “good credit score” is over 780. In actuality, the average FICO® scores of approved conventional and FHA mortgages are much lower.
The average conventional loan closed in August had a credit score of 752, while FHA mortgages closed with a score of 683. The average across all loans closed in August was 724. The chart below shows the distribution of FICO® Scores for all loans approved in August.
Bottom Line
If you are a prospective buyer who is ‘ready’ and ‘willing’ to act now, but are not sure if you are ‘able’ to, let’s sit down to help you understand your true options.
There is plenty of money for buyers and if you’re looking for something interesting, I’m ready to chase that down. Let’s catch that dream with a fantasy mortgage.
I literally wake up in the middle of the night with marketing ideas for my listings. Using modern marketing tactics, I pride myself on setting the gold standard for Real Estate marketing.
Nearly 50% of the properties that I marketed last year went under-contract opening weekend. Trust me. My clients were delighted.
Personally, I love to dance (tango, west coast swing, lindy hop), surf (well, I try to), and laugh (every chance I get)!
Joyfully,
Ann
