Do you need perfect credit and a large down payment to get a mortgage?
Perfect Credit for a Mortgage
Most home buyers think they need perfect credit to get a mortgage. But in reality, your credit doesn’t need to be perfect to qualify for a mortgage, it just needs to be good credit. In 2013, people who qualified for a mortgage had an average credit score of 743. Since then, the average credit score has fallen to 723. And if you look at FHA mortgage scores for the same period, the scores have decreased from 697 to 683.
The Down Payment
Most home buyers have been told they need a large down payment. And they’re learning that it’s difficult to save the 15% to 20% necessary to get a mortgage.
Well, someone is telling these home buyers something that’s wrong!
Once upon a time, a 20% down payment was normal. However, lately that trend has been changing. In fact, most buyers are now making smaller cash down payments. Lately, 71% of buyers have purchased a home with less than 20% cash down. Additionally, 60% of those home buyers had down payments of less than 6%!
Mortgage Insurance
When your down payment is less than 20%, you’ll be paying some kind of mortgage insurance. However, if the choice is between paying mortgage insurance or not owning a home, most buyers will opt to pay the mortgage insurance. That’s because their alternative is to continue to be a tenant.
Rising Rents
88% of property managers have raised their rents in the past 12 months, according to a survey by Rent.com, All indications are that this trend will continue. Many property managers, instead of renegotiating new, higher paying leases with existing tenants, are likely to bring in new tenants. And they will charge them a higher rate. The pain of having to pay mortgage insurance is offset by the probability of continually rising rents.
Here’s the Cliff Notes Version
88% of property managers have raised rents in the past 12 months.
You need good credit to get a mortgage, but it doesn’t need to be perfect.
By paying mortgage insurance, it’s possible to get a mortgage with less than 6% down.
Quite often, it costs less per month to own a home than to rent a home.
When you’re ready to search for your own hone, contact us, Bunny and Art. We’ve helped hundreds of people find their new home, and we can help you too.
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