The majority of consumers are wildly wrong about what it takes to get a mortgage
The majority of consumers now think it is much harder to qualify for a home loan than it actually is, according to a recent Fannie Mae survey of more than 3,000 people. Respondents thought they needed much higher credit scores and bigger down payments than necessary. They also didn’t know much about the minimum debt levels lenders require.
With the proliferation of online credit monitoring sites and mortgage rate calculators, a growing number of respondents said they had seen their credit score recently, but nearly half couldn’t remember what it was. Fannie Mae compared the results to a benchmark survey done in 2015.
The survey also found that while the use of online sources of mortgage information is much more common, consumers either didn’t know or overestimated the minimum credit score needed to qualify for a loan. Half of those asked were unsure, 14% thought the FICO score needed to be higher than 680, and 32% thought it needed to be higher than 620. The minimum FICO score is actually 550. Both current homeowners and renters were equally uninformed.
Consumers also overestimated the required down payment on a mortgage. Most didn’t know how much was needed, 13% thought the minimum was 20% and 1 in 5 thought they needed 6-10%. In reality, the FHA backs loans with a minimum down payment of 3.5%, and there are other programs through the U.S. Department of Agriculture as well as the U.S. Department of Veterans Affairs that offer zero down payment options.– Diana Olick , CNBC
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