There are many people sitting on the sidelines trying to decide if they should purchase a home or sign a rental lease. Some might wonder if it makes sense to purchase a house before they are married and have a family. Others may think they are too young. And still others might think their current income would never enable them to qualify for a mortgage.
We want to share what the typical first time home buyer actually looks like based on the National Association of REALTORS most recent Profile of Home Buyers & Sellers. Here are some interesting revelations on the first time buyer:
What FICO Score is Needed to Buy Your First 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. It may not take the high credit score that you thought to buy your first home.
So If you want to buy your first home you may not be much different than many people who have already purchased their first home. If you are one of the many Millennials who are considering a home purchase you may be surprised how much the requirements for a mortgage have eased. Let’s get together to figure out if your dream home is already within your grasp.