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Are you Qualified and Don’t Know It?

Are You Qualified And Don’t Know It?

Do you have a reliable job you’ve been at for 2 years and have decent income and credit? If so, you might be surprised at what kind of home you can qualify for.

The problem is, many folks that are eager to own a home don’t even try to get a mortgage. More than likely because they think rigid mortgage requirements will rule them out.

Or they lack the basic knowledge of the mortgage and home buying process.

New research seems to indicate 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. That’s where we come in.

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 purchase that home you’ve been dreaming of.

Consumers Think Mortgage Regulations Are Too Tough

Fannie Mae recently polled 3,000 of your fellow consumers about their understanding of mortgage requirements. Some findings were surprising:

  • Only 11% were aware that the minimum FICO credit score needed to obtain a mortgage is 580. Most thought it was 650.
  • Over 40% of those surveyed didn’t know their own credit score.
  • Most people think you need to put down at least 10% for a down payment. The truth is, the median is 3%; some programs don’t even require a down payment.
  • Only 23% of those surveyed were aware that low down payment programs are available.
  • Over three out of five didn’t know that the debt-to-income ratio lenders don’t want total debt payments to exceed is 50%.
  • Only 12% of homeowners and 9% 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
    1. Insufficient income (chosen by 23% of respondents)
    2. Too much debt (17%)
    3. Insufficient credit score/credit history (15%)
    4. Affording the down payment or closing costs (14%)
    5. Lack of job security/stability (9%)

Here’s the takeaway for those who would rather rent than buy. The report suggests that these people are more uncertain about mortgage requirements. And that may be what’s holding them back from learning more details or reaching for a goal that seems out of their grasp.

Avoiding Unknowns Leads To Missing Out On Home Ownership

The financial downturn started in 2008. At that point, the mortgage industry underwent significant changes to adjust to new financial regulations, even eliminating some mortgage products. These changes caused many financial institutions to be more conservative in their offerings. They emphasized risk-based pricing.

Many consumers believed the message was clear: Anyone without an excellent credit score will have to pay prohibitive rates or simply not have any option for purchasing a home. Many would-be buyers have assumed home ownership isn’t in the cards for them. That couldn’t be further from the truth.

Many people simply talk themselves out of seeking a mortgage. People generally try to avoid pain or embarrassment.

No one likes to hear the word ‘no.’ And people generally try to avoid pain or embarrassment. Many think it’s easier not to try and, therefore, not to be disappointed.

Or, they may know a friend or family member who had a less than enjoyable mortgage experience. Stories like that can become a strong deterrent.

Financial literacy is often self-taught. Credit scores, budgets, mortgage fundamentals, and balancing a checkbook isn’t something that comes naturally. You need the desire to learn and someone with experience to teach you.

There’s a reason why many lack these facts. Information available on the internet can be overwhelming. It can be tough for buyers to vet the accuracy of educational content properly. You sometimes get a lot of different experts saying different things.

Don’t Be Afraid To Learn And Try

Often, only two things stand in the way of buyers seeking a mortgage: their own fears and lack of info about mortgage requirements. Consider taking a personal finance course at your local community college. Research these topics online carefully. Review your credit report for free. Learn your credit score. Explore buyer assistance programs. And find and talk with a trusted real estate agent and lending expert.

This last tip is especially important.

Before talking with experts, write down your questions. Never feel embarrassed or fear being belittled by asking these questions. A true professional wants to hear your questions. That way, they can understand the big picture and give you relevant and current information.

When talking with the pros, ask about different loan options. Inquire about down payment assistance programs available. 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. Get the 411 on all the mortgage requirements. You need to do careful research. Be sure you fully understand the terms of a loan or program. And learn how it affects the total cost over the life of your loan.

See If You Qualify

Many people think they will be eligible to buy later in life but not now. To their surprise, they can buy immediately.

Check your home buying eligibility. Talk to Steve Gilbert at Seattle Mortgage Brokers today.

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*This article does not represent legal interpretation or advice. This is not a commitment to make a loan. Loans are subject to borrower qualifications, including income, property evaluation, sufficient equity in the home to meet LTV requirements, and final credit approval. Approvals are subject to underwriting guidelines, interest rates, and program guidelines, and are subject to change without notice based on applicant’s eligibility and market conditions. Refinancing an existing loan may result in total finance charges being higher over life of loan. Reduction in payments may reflect longer loan term. Terms of the loan may be subject to payment of points and fees by the applicant. Seattle Mortgage Brokers, LLC NMLS: LO# 305371/1598279 | MB# 761615

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