Charleston SC Realtor: Mortgage Qualification Easier
There is more good news from the real estate market: the average FICO score for approved mortgages keeps dropping. Here is a breakdown of the average score state-by-state for the last quarter of 2016:
Here is a look at the average FICO score for the last 12 months, and you can see that number has dropped (although it crept up ever so slightly in March).
Now some people may look at these latest reports and feel that you still need stellar credit to get a mortgage.
However, that is not the case.
Part of the reason that the national average is above 720 is because of misconceptions that exist regarding qualifying for a mortgage.
I covered this in a previous post, but many would be buyers have already disqualified themselves because they do not think they have sufficient credit to qualify for a mortgage.
Many would be buyers can actually qualify for a mortgage right now, but because they do not feel they are qualified, they are waiting to get their credit well above 700 before applying.
So, these national numbers are a little misleading.
But that is not the case in the real estate market right now, and the latest statistics and reports confirm this.
Charleston SC Realtor: You Do Not Need A FICO Score Above 750
This next infographic shows the average FICO score for approved mortgages last month:
Over half of approved mortgages had a FICO score below 749. And nearly 30% of approved mortgages were below 700.
Here is a breakdown of the average FICO score by loan type:
Qualifying for a mortgage is easier today than it has been in years.
Here is the latest Mortgage Credit Availability Index from the Mortgage Bankers Association:
Lending guidelines are not nearly as strict as they were as a result of the mortgage meltdown.
Charleston SC Realtor: Are Mortgages Too Easy To Qualify For?
Of course, whenever this news is relayed, the first conclusion people come to is panic or concern. Does this mean we are heading back to 2006? No.
Mortgage Credit Availability has skyrocketed since 2013. But that is because as a result of the mortgage meltdown, banks tightened up their lending requirements and were so strict that barely anyone could get a mortgage unless they had perfect credit.
That was a bit of an overreaction to the circumstances, but it was a necessary correction because banks had been too carefree is approving mortgages before–which lead to the meltdown.
So, it is important to look at Mortgage Credit Availability going back to during the real estate boom, before the crash. As you can see by the following infographic, while mortgages are easier to get than they have been over the last 4 years or so, they are nowhere near as easy as the crazy pre-meltdown days.
This is all great news for anyone thinking about buying a home.
But this is also great news for home owners that might be thinking about moving. Because the misconceptions that exist in the market don’t just apply to the buyers, it also includes potential sellers.
Charleston SC Realtor: Sellers Selling Themselves Short
Many home owners have already disqualified themselves for the same reasons potential buyers have–they don’t think that they can qualify for a mortgage and they also do not think they have enough money for a down payment.
I’ve already covered the first part–qualifying for a mortgage.
But down payment is also a misconception holding back potential sellers. Despite the fact that they have been through this process already, many would be sellers mistakenly believe that they still need at least 15% or 20% (or more) for a down payment on a home. That is simply not true.
There was a recent study from the National Association of Realtors that asked home owners and renters about what it takes to own a home. It wasn’t too surprising that the majority of non home owners believed that you need at least 10% for a down payment.
What was surprising was that the majority of current home owners believe that you need at least 10% for a down payment.
It is important to know what is happening in the real estate market, whether you are looking to buy or sell.
If you are thinking about buying, whether or not if you have a house to sell, then you need to know the facts about what it takes to purchase a home.
Charleston SC Realtor: Opportunity Lost
Many would be buyers have already disqualified themselves because of the misconceptions that still exist out there. But it is important to know that you do not need near perfect credit or a credit score above 750 just to qualify for a mortgage.
It’s a shame, because now is a great time to buy a house in the current real estate market, and the longer you wait, the more it will cost you. Interest rates and home prices are both increasing and will continue to do so.
Many would be sellers have also disqualified themselves as well because of these same misconceptions. It is important that they understand the truth about credit requirements and the down payment needed to purchase their next house, because they too are missing a golden opportunity.
Buyer demand is strong, home values are rapidly increasing, and the market is starved for inventory.
The current market is doing very well–but there is a segment of the market missing the opportunity that exists simply because they do not know the facts. Don’t let this be you–keep up with the latest real estate info on this blog or also here.
If you are thinking about buying or selling, then check out my Pam Marshall Realtor website and see why I am the Charleston SC realtor for you.