Two Big Myths in the Homebuying Process

    Two Big Myths in the Homebuying Process | Simplifying The Market

    The 2020 Millennial Home Buyer Report shows how this generation is not really any different from previous ones when it comes to homeownership goals:

    “The majority of millennials not only want to own a home, but 84% of millennials in 2019 considered it a major part of the American Dream.”

    Unfortunately, the myths surrounding the barriers to homeownership – especially those related to down payments and FICO® scores – might be keeping many buyers out of the arena. The piece also reveals:

    “Millennials have to navigate a lot of obstacles to be able to own a home. According to our 2020 survey, saving for a down payment is the biggest barrier for 50% of millennials.”

    Millennial or not, unpacking two of the biggest myths that may be standing in the way of homeownership among all generations is a great place to start the debunking process.

    Myth #1: “I Need a 20% Down Payment”

    Many buyers often overestimate what they need to qualify for a home loan. According to the same article:

    “A down payment of 20% for a home of that price [$210,000] would be about $42,000; only about 30% of the millennials in our survey have enough in savings to cover that, not to mention the additional closing costs.”

    While many potential buyers still think they need to put at least 20% down for the home of their dreams, they often don’t realize how many assistance programs are available with as little as 3% down. With a bit of research, many renters may be able to enter the housing market sooner than they ever imagined.

    Myth #2: “I Need a 780 FICO® Score or Higher”

    In addition to down payments, buyers are also often confused about the FICO® score it takes to qualify for a mortgage, believing they need a credit score of 780 or higher.

    Ellie Mae’s latest Origination Insight Report, which focuses on recently closed (approved) loans, shows the truth is, over 50% of approved loans were granted with a FICO® score below 750 (see graph below):Two Big Myths in the Homebuying Process | Simplifying The MarketEven today, many of the myths of the homebuying process are unfortunately keeping plenty of motivated buyers on the sidelines. In reality, it really doesn’t have to be that way.

    Bottom Line

    If you’re thinking of buying a home, you may have more options than you think. Let’s connect to answer your questions and help you determine your next steps.

    Content previously posted on Keeping Current Matters

    Rajeev Vashist

    Serving Northern Virginia real estate needs for over 27 years – Rajeev Vashist has built his reputation through surpassing his clients’ expectations at every turn. Whether they are buying or selling, his knowledge of the local market is unparalleled and has proven to be advantageous in every transaction for his clients. Rajeev provides each client with extraordinary customer care and services, always implementing –cutting-edge technology in the process, which has earned him raving reviews from his past clients. His passion for real estate and focused determination has helped him excel in his career and afforded him with numerous achievement awards. Rajeev is recognized for consistently placing in the top one percent of all real estate professionals in America. Specializing in navigating the ups and downs of the Northern Virginia Real Estate market, his integrity, dedication, insight, and hard work are only a few of the reasons that over 98 percent of Rajeev’s business comes from repeat clients and referrals. His clients acknowledge the value of his unending, local expertise, negotiation skills, and exceptional personal attention– the level discriminating clientele expect and deserve.
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