Debunking Some Myths about Mortgage Availability

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There seems to be a growing chasm between what the public believes to be needed and what is actually needed to qualify for a residential home loan. A recent survey by Ipsos reported that:

Two-thirds of those surveyed believe they need a very good credit score to buy a home, with 45 percent thinking a “good credit score” is over 780.

Consumers overestimate the down payment funds needed to qualify for a home loan, with 36 percent thinking a 20 percent down payment is always required.

However, according to American Enterprise Institute’s International Center on Housing Risk’s May First-Time Buyer Mortgage Risk Index (FBMRI), reality is far from perception. The report reveals:

70% of first-time buyer mortgages had a combined loan-to-value ratio of 95% or higher

About 20% of first-time buyers taking out mortgages had a FICO score below 660

25% had total debt-to-income ratios above 43 percent

The median first-time buyer with an agency mortgage made a down payment of only 3 percent, or $7200 in dollar terms.

The median FICO score for first-time buyers with agency mortgages was 705

For first-time buyers with FHA-insured loans, the median FICO score was only 672

These numbers contradict the frequent claims that first-time buyers face difficulties in obtaining mortgages.

Bottom Line

Stephen Oliner, co-director of AEI’s International Center on Housing Risk explained the reality of the situation.

“One hears all the time that first-time buyers have limited access to mortgage debt. But this isn’t true. Many first-time buyers with low FICO scores and little money down are buying homes every month.”

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About The Panos Team

Since 2003, Mike and Tammi have made Las Vegas their home where they have become successful agents in a highly competitive market. Our enthusiasm, integrity, diligence, work ethic and negotiation skills have well served our Buyer and Seller clients in all residential arenas including single family homes, condos, townhomes and highrise. We specialize in short sales as well as Bank Owned (REO) properties and traditional home sales. Our goal is not to be the #1 agents in Las Vegas...our goal is to be YOUR #1 agents in Las Vegas! As Las Vegas residents, we appreciate what a great place this is to raise a family, spend quality time with friends and loved ones and just simply enjoy life. We consider it a privilege to be able to help others achieve their investment goals when it comes to living in Las Vegas. We value family time, enjoy camping and riding quads, we are active in our church. We also enjoy bowling, eating ice cream, participating in our annual family talent show and just simply relaxing.
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