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First Time Buyer Here Is What You Need To Know About Mortgages
When it comes to mortgages, there’s a big gap between what people think they need in order to get one and the reality of what buyers are successfully doing—especially young people.
When it comes to what might be the biggest purchase of your life—one that can be incredibly intimidating for first-time buyers—it’s nice to know real facts. And in the mortgage market, you don't have to be intimidated.
Last week, the National Association of Realtors® issued its 2017 Aspiring Home Buyers Profile report. The report cites data from surveys taken in the third quarter of 2016 about down payments.
The report summarized that 39% of non owners believe they need more than 20% for a down payment on a home, 26% believe they need to put down 15% to 20%, and 22% believe a down payment of 10% to 14% would work.
Those non owners thought a down payment would need to be about 16%. The average down payment on purchase mortgages in 2016 was 11%.
When we analyze the mortgages taken out by people under 35, who represent the majority of first-time buyers, we see the average down payment was even lower, at just under 8%. In other words, aspiring first-time buyers think it takes twice as much to buy a home than it really does.
In 2016, first time buyers purchased homes with less than 5% down. I see it with every first time buyer and it is less than one-third of what the average non owner had assumed!
There are a slew of important factors like who you are, your financial circumstances, the home’s location, and the price of the home.
There are many programs for first time buyer......Ask!
It is possible to buy a home with a mortgage with no money down. VA and USDA loans are the most popular loans that offer the ability to put no money down. In 2016, 16% of buyers under 35 put no money down.
It doesn’t require perfect credit, just fair credit. The average FICO was 713, and the floor we observed in FICOs (below which very few mortgages were made) was 639.
So the final scoop is for the millennial dreaming of buying a home this year, you need a FICO score of at least 639 and enough money that you could put down at most 5%. If you live in a typical American town, what you need could be as little as $3,500.
GO FOR IT
Sell or Buy your way, traditional or by the auction method: Tamara Whelpley has lived and worked in Denver for over 30 years and is an expert in Washington Park, Cherry Creek, Highlands and throughou....