Another Great Article From: Keeping Current MattersFannie Mae recently released their “What do consumers know about the Mortgage Qualification Criteria?” Study. The study revealed that Americans are misinformed about what is required to qualify for a mortgage when purchasing a home. Here are three takeaways:
- 59% of Americans either don’t know (54%) or are misinformed (5%) about what FICO score is necessary
- 86% of Americans either don’t know (59%) or are misinformed (25%) about what an appropriate Back End Debt-to-Income (DTI) ratios is
- 76% of Americans either don’t know (40%) or are misinformed (36%) about the minimum down payment required
To help correct these misunderstandings, let’s take a look at the latest Ellie Mae Origination Insight Report, which focuses on recently closed (approved) loans.
BACK END DTI
Whether buying your first home or moving up to your dream home, knowing your options will definitely make the mortgage process easier. Your dream home may already be within your reach.
Some Highlights From Keeping Current Matters
- 36% of Americans think they need a 20% down payment to buy a home. 44% of Millennials who purchased a home this year have put down less than 10%.
- 71% of loan applications were approved last month
- The average credit score of approved loans was 723 in September (the lowest recorded score since Ellie Mae began tracking in August 2011).
Credit Scores range from 300 to 850. A credit score of 760 or more is considered an excellent credit score.
Although you may be able to get a home loan with a credit score of less that 760, to get the best interest rate on your loan, you will need a credit score of 760 or more.
Here are 5 Quick Ways to Boost Your Credit Score
1. Get a copy of your credit report and dispute any errors you find.
2. Negotiate with a creditor that is reporting negative information about you. Write a letter and find out what you can do to erase that negative information.
3. Don’t max out your credit cards. If you have, start paying those balances down. You should not have used more than 30% of your available credit at anytime and using only 10% is best. This applies even if you are paying the balance of monthly. 30% of your credit score rating is based on debt owed. Continue reading