Another Great Article From: Keeping Current Matters Fannie 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.
FICO SCORES
BACK END DTI
DOWN PAYMENTS
Bottom Line
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.
first time home buyer
Buy Now or Wait Until 2017
![Should I Buy Now Or Wait Until Next Year? [INFOGRAPHIC] | Keeping Current Matters](https://i0.wp.com/www.keepingcurrentmatters.com/wp-content/uploads/2016/01/Cost-of-Waiting-KCM.jpg)
Some Highlights:
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Nine Steps To Buying A Home
FICO Score To Buy A House May Be Lower Than You Think!
Millennials: What FICO Score is Needed to Buy a Home?
In a recent article by the Wharton School of Business at the University of Pennsylvania, it was revealed that some Millennials are not looking to purchase a home simply because they don’t believe they can qualify for a mortgage.
The article quoted Jessica Lautz, the National Association of REALTORS®’ Managing Director of Survey Research, as saying that there is a significant population that does not think they will be approved for a mortgage and doesn’t even try. The article also quoted Fannie Mae CEO Tim Mayopoulos :
“I do think that there’s a sense out there in the marketplace among borrowers that credit may not be available, especially for people with lower credit scores.”
So what credit score is necessary?
A recent survey reported that two-thirds of the respondents believe they need a very good credit score to buy a home, with 45 percent thinking a “good credit score” is over 780.
In actuality, the FICO score on closed loans (as reported by Ellie Mae) is much lower and has been dropping over the last several months.
Bottom Line
Millennials who are considering a home purchase should get advice from a local real estate or mortgage professional now. They may be surprised how much the requirements for a mortgage have eased.
National Association of REALTORS® 2015 Housing Survey
2015 Housing Pulse Survey Highlights
Like A Virgin
![Buying A Home Can Be Scary... Until You Know the FACTS! [INFOGRAPHIC] | Keeping Current Matters](https://i0.wp.com/www.keepingcurrentmatters.com/wp-content/uploads/2015/10/Mythbusters-KCM.jpg)
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).
Grow Your Family’s Wealth as Home Equity Builds
A great blog post from Keeping Current Matters!
With residential real estate values rising quite substantially in most parts of the country over the last few years, many homeowners are seeing a major increase in their family’s wealth as equity continues to build in their house. A recent study by the Joint Center of Housing Studies at Harvard University revealed that home equity grew nicely last year and has grown dramatically over the last five years…
Buyers looking today may not see the same build-up in equity but could still do quite well. Let’s assume you went into contract in the next six weeks and closed on a $250,000 home in January. If we take the house value projections from the last Home Price Expectation Survey, here is how your equity would grow over the next four years: 
Bottom Line
Homeownership has historically been a great way for the average American family to build wealth over time.
Statistics About Low Inventory of Homes in Fall 2015
![Existing Home Sales Slow Amongst Tight Inventory [INFOGRAPHIC] | Keeping Current Matters](https://i0.wp.com/www.keepingcurrentmatters.com/wp-content/uploads/2015/09/EHS-SEP.jpg)
Some Highlights:
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Existing Home Sales slowed down slightly in August but remained 6.2% higher than August 2014.
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Inventory levels remain below the 6 months necessary for a normal market at a 5.2-month supply.
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First Time Buyers rebounded in August to make up 32% of sales, matching a 2015 high.
Home Loan Application
What you will need to have to make your home loan application
There are numerous home loans available today, including FHA, VA and Conventional. All of these loans will require you to fill out a loan application. This process is much easier if you are prepared. Here is a list of required items you are going to need:
1. Latest 2 paycheck stubs
2. Last 2 years W-2’s or 1099’s
3. If self-employed; last 2 years tax returns
4. Most recent bank statements (all your accounts for 2 months)
5. Loan and lease information on other real estate owned
6. Drivers license or other form of ID
Your lender may want more information and if they do, they will ask for it. Like the boy scouts, “Be prepared”, and you will have completed your loan application in no time!
Do You Really Think Your Landlord Pays for Repairs?
A recent article that appeared on Nasdaq.com addressed the issue of whether it is best to buy or rent in today’s real estate environment. The article was very fair in discussing both options.
“For some people, the choice is very clear: Buying a home can be more costly, given the cost of the purchase itself, plus taxes and insurance, plus maintenance and repairs.”
This argument is often made in defense of renting. However, we don’t believe it makes logical sense. They claim that, as a renter, you won’t have the expenses of “taxes and insurance, plus maintenance and repairs”. Do they really believe that the landlord pays all those expenses for their tenants?
The vast majority of landlords own rentable real estate as a form of investment. As any other investor would, they expect to make a return on that investment (ROI) – otherwise known as profit. In order to make a profit, the landlord needs to include EVERY expense they incur into the rent…AND THEN ADD A PROFIT MARGIN!!
We think it is incorrect to advise a prospective renter that they won’t have the same expenses that a homeowner would have. They just pay those expenses to a landlord with a “premium” built in.