Stop overestimating the difficulty of qualifying

Do you have a reliable job and decent income and credit? If so, you might be surprised what kind of home you can qualify for.

The problem is that many who want to own a home don’t even try to get a mortgage. It’s probably because they think rigid mortgage requirements will keep them out.

Or they are missing basic mortgage information and home buying process.

New research indicates that consumers think qualifying for a mortgage is harder than it actually is. And many lack the facts and know-how to properly pursue home financing.

Don’t rule out buying a home because you don’t think you qualify for a loan. Chances are, armed with knowledge and the right advice, you can buy the house you were thinking of.

Report: Consumers Think Mortgage Guidelines Are Tougher Than They Are

Fannie Mae recently surveyed 3,000 consumers about their understanding of mortgage requirements rules. Some results were surprising:

  • Only 11% knew that the minimum FICO credit score needed to get a mortgage is 580. Most thought it was 650.
  • More than 40% did not know their own credit score.
  • Most people think you need to deposit at least 10% for a down payment. The truth is that the median is 3%; some programs doesn’t even require a deposit.
  • Only 23% of respondents knew that low down payment programs are available.
  • More than three out of five did not know that the debt to income ratio lenders do not want total debt repayments to exceed 50%.
  • Only 12% of owners and 9% of tenants were able to identify the correct credit score range needed to qualify for a mortgage.
  • The top five reasons cited for expected difficulty in obtaining a mortgage were
    1. Insufficient income (chosen by 23% of respondents)
    2. Too much debt (17%)
    3. Insufficient credit score/credit history (15%)
    4. Pay the deposit or closing costs (14%)
    5. Lack of job security/stability (9%)

There is another point to remember about those who prefer to rent rather than buy. The report suggests that these people are more uncertain about mortgage requirements. And that may be what keeps them from learning more details or achieving a goal that seems beyond their reach.

Avoiding the unknown leads to missing out on home ownership

Steve Stapletonassistant vice president of home loans for Amplify Credit Union, explains why so many people suffer from misconceptions about mortgage requirements.

“The financial downturn started in 2008,” he said. “Then the lending industry underwent significant changes to adapt to new financial regulations, even eliminating some mortgage products. These changes have caused many financial institutions to be more conservative in their offerings. They emphasized risk-based pricing.

Many consumers believed that the message was clear: anyone without a great credit score will face prohibitive rates or simply have no options when buying a home. “As a result, many potential buyers assumed that home ownership was not an option for them. That couldn’t be further from the truth,” Stapleton adds.

Michael Mesa is a Certified Mortgage Planning Specialist with Fairway Independent Mortgage Corporation. He says too many people discourage themselves from applying for a mortgage.

“People usually try to avoid pain or embarrassment.”

“Nobody likes to hear the word ‘no’. And people usually try to avoid pain or embarrassment. Many think it’s easier not to try and, therefore, not be disappointed,” says Mesa.

Or, “they may know a friend or family member who had a less than pleasant mortgage experience. Stories like that can become a powerful deterrent,” Mesa notes.

Bruce Ailionreal estate agent and real estate lawyer, is not surprised that so many people are uninformed about credit scores and mortgage requirements.

“Financial literacy is often self-taught. Credit scores, budgets, mortgage fundamentals and balancing a checkbook are not something that comes naturally. You need the desire to learn and someone with experience to teach you,” says Ailion.

There is a reason many miss these facts.

“The information available on the Internet can be overwhelming,” says Stapleton. “It can be difficult for buyers to properly verify the accuracy of educational content. Sometimes you get a lot of different experts saying different things.

Don’t be afraid to learn and try

Often, only two things keep buyers from applying for a mortgage: their own fears and lack of information about mortgage requirements.

“Consider taking a personal finance course at your local community college. Research these topics thoroughly online. Review your credit report for free. Learn your credit score. To explore buyer assistance programs. And find and chat with a trusted realtor and lending expert,” recommends Ailion.

This last tip is particularly important.

“Before speaking with experts, write down your questions. Never feel embarrassed or fear being put down by asking these questions,” Mesa advised. “A true professional wants to hear your questions. That way, they can understand the big picture and give you relevant, up-to-date information. »

When talking with the pros, ask about the different loan options. Find out about available down payment assistance programs. Find out what you are entitled to. Find out what your minimum down payment and credit score should be. Determine how much you will pay monthly and over the term of a given loan. Get 411 on all mortgage requirements.

“You have to do extensive research. Make sure you understand the terms of a loan or program. And find out how it affects the total cost over the life of your loan,” adds Mesa.

See if you qualify

Lending experts agree: Many people think they’ll be eligible to buy later in life, but not now. To their surprise, they can buy immediately.

Check your home buying eligibility and get a quote below.

The information contained on The Mortgage Reports website is provided for informational purposes only and does not constitute advertising for products offered by Full Beaker. The views and opinions expressed herein are those of the author and do not reflect the policy or position of Full Beaker, its officers, parent company or affiliates.