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2 Myths Holding Back Home Buyers

2 Myths Holding Back Home Buyers | MyKCM

In a recent article, First American shared how millennials are not really any different from previous generations when it comes to the goal of homeownership; it is still a huge part of their American Dream. The piece, however, also reveals,

 “Saving for a down payment is one of the biggest obstacles faced by first-time home buyers. Dispelling the 20 percent down payment myth could open the path to homeownership for many more.”

 Myth #1: “I Need a 20% Down Payment”

Buyers often overestimate how much they need to qualify for a home loan. According to the same article:

“Americans still overestimate the qualifications needed to get a mortgage, resulting in qualified potential buyers not even considering homeownership. Indeed, the Urban Institute report revealed that 16 percent of consumers believed that the minimum down payment required by lenders is 20 percent or more, and another 40 percent didn’t know at all.”

While many potential buyers still think they need to put at least 20% down for the home of their dreams, they often don’t realize how many assistance programs are available with as little as 3% down. With a little research, many renters may actually be able to enter the housing market sooner than they ever imagined.

Myth #2: “I Need a 780 FICO® Score or Higher”

In addition to down payments, buyers are also often confused about the FICO® score it takes to qualify for a mortgage, believing a ‘good’ credit score is 780 or higher.

To debunk this myth, let’s take a look at Ellie Mae’s latest Origination Insight Report, which focuses on recently closed (approved) loans.2 Myths Holding Back Home Buyers | MyKCMAs indicated in the chart above, 50.23% of approved mortgages had a credit score of 500-749.

Bottom Line

Whether buying your first home or moving up to your dream home, knowing your options will make the mortgage process easier. Believe it or not – your dream home may already be within your reach.

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Starting the Search for Your Dream Home? Here Are 5 Tips!

Starting the Search for Your Dream Home? Here Are 5 Tips! | MyKCM

In today’s real estate market, low inventory dominates the conversation in many areas of the country. It can often be frustrating to be a first-time homebuyer if you aren’t prepared.

In a realtor.com article entitled, “How to Find Your Dream Home—Without Losing Your Mind,” the author highlights some steps that first-time homebuyers can take to help carry their excitement of buying a home throughout the whole process.

1. Get Pre-Approved for a Mortgage Before You Start Your Search

One way to show you are serious about buying your dream home is to get pre-qualified or pre-approved for a mortgage before starting your search. Even if you are in a market that is not as competitive, understanding your budget will give you the confidence of knowing whether or not your dream home is within your reach.

This step will also help you narrow your search based on your budget and won’t leave you disappointed if the home you tour, and love, ends up being outside your budget!

2. Know the Difference Between Your ‘Must-Haves’ and ‘Would-Like-To-Haves’

Do you really need that farmhouse sink in the kitchen to be happy with your home choice? Would a two-car garage be a convenience or a necessity? Could the ‘man cave’ of your dreams be a future renovation project instead of a make-or-break right now?

Before you start your search, list all the features of a home you would like and then qualify them as ‘must-haves’, ‘should-haves’, or ‘absolute-wish list’ items. This will help keep you focused on what’s most important.

3. Research and Choose a Neighborhood You Want to Live In

Every neighborhood has its own charm. Before you commit to a home based solely on the house itself, the article suggests test-driving the area. Make sure that the area meets your needs for “amenities, commute, school district, etc. and then spend a weekend exploring before you commit.”

4. Pick a House Style You Love and Stick to It

Evaluate your family’s needs and settle on a style of home that would best serve those needs. Just because you’ve narrowed your search to a zip code, doesn’t mean that you need to tour every listing in that zip code.

An example from the article says, “if you have several younger kids and don’t want your bedroom on a different level, steer clear of Cape Cod–style homes, which typically feature two or more bedrooms on the upper level and the master on the main.”

5. Document Your Home Visits

Once you start touring homes, the features of each individual home will start to blur together. The article suggests keeping your camera handy to document what you love and don’t love about each property you visit.

Making notes on the listing sheet as you tour the property will also help you remember what the photos mean, or what you were feeling while touring the home.

Bottom Line

In a high-paced, competitive environment, any advantage you can give yourself will help you on your path to buying your dream home.