If a big down payment is preventing you from buying a home, you may want to reconsider and start shopping.
The Harvard Joint Center for Housing Studies recently estimated that about 50% of the 25-34 year old renters in the top 85 metropolitan areas have the income and credit scores to qualify for a mortgage today. That’s approximately 5.5 million renter households.
So why are these potential new homeowners not shopping for a home?
According to Freddie Mac’s Christina Boyle, the reason is that they are misinformed about the amount of the required down payment.
- Consumers persistently overestimate the size of a down payment they need in order to finance a home.
- Specifically, 38% of the 25-29 year old and 42% of the 30-34 year old said lenders demand down payments of 15%.
- Roughly 60-72% of first-time home buyers don’t believe they can get a mortgage and are underestimating their potential for qualifity for a conforming, conventional mortgage with a low down payment.
The statistics for 2014 show that 1 in 5 borrowers who took out conforming, conventional mortgages put down 10% or less.
Bottom Line: If you are ready to buy a home and you have your finances in order, start shopping. Your down payment may not be as big as you think. Be sure to speak with a Real Estate Professional to find out.
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