For First Home Buyers, Myths Persist
The average down payment for a home is only 11 percent.
However, the prevailing sentiment among most non-owners is that a family needs 20 percent of a home’s purchase price in order to buy.
Yes, more money down does equate to paying less per month.
But, most people can afford the monthly payments on a house, it’s the big roll of cash needed up front that keeps people away from a mortgage.
The National Association of Realtors recently published a report called the 2017 Aspiring Home Buyers Profile. In it, they uncovered the following statistics:
39 percent of non-owners say they believe they need more than 20 percent for a down payment on a home purchase
26 percent believe they need to put down 15 to 20 percent
22 percent say they need a down payment of 10 % to 14 % to buy
There are a number of down payment programs that offer homebuyers the chance to pay much less in order to get into a home.
The Department of Veterans Affairs and U.S. Department of Agriculture offer no-down-payment programs, while both Fannie Mae and Freddie Mac offer first-time buyer products that accept 3 percent and 3.5 percent down, respectively.
Another popular misconception about home ownership today is that you must have spotless credit to get one of these low down payment mortgages.
Again, not true.
The same NAR study revealed that on average, FICO scores were around 710 for the aforementioned programs. Yet, those with scores around 639 were also getting approved.
Granted, individual situations vary greatly, and banks and mortgage organizations need to take into account some unique factors.
We see that as a good thing, mortgage approval shouldn’t be black and white.
Century 21 Gavish Real Estate has been a champion of the first-time buyer and has worked hard to offer educational seminars and train our agents to understand the needs and unique circumstance of those who are just entering the journey of home ownership.
It’s not an easy thing to do, to buy a home. There are as many emotional barriers as there are financial.
Real estate agents often have to be more than advisors and sales experts; they have to be friends and confidants, when the situation calls for it, of course.
It doesn’t always call for it, but when it does, we’ll be there.