Misconceptions persist about what it takes to buy a home
Most Americans want to own a home, but many have misconceptions about what it takes to purchase a property, according to a recent Wells Fargo survey.
The company’s second annual “How America Views Homeownership” survey, which polled more than 2,000 Americans, found that consumers overestimate both the amount of credit needed to obtain financing and how much they need to put down on the loan.
Two-third of respondents believe they need “very good” credit to buy a home, with 45 percent thinking a “good credit score” is more than 780; according to many credit agencies, a score of 780 is considered “excellent” credit and more than 660 is considered good. More so, more than one-third of respondents think that a 20-percent down payment is required to obtain financing. While a 20-percent down payment can eliminate the need for private mortgage insurance, financing programs with lower down payments are available.
“Credit worthiness isn’t determined based on a single factor, so potential home-buyers should find out what options may be available before excluding themselves based on credit score alone,” Franklin Codel, head of mortgage production for Wells Fargo, said in a statement.
While there was confusion regarding mortgages and financing, many consumers understand other aspects of the buying a home.
Nearly all (90 percent) of respondents were aware of the other costs associated with buying a home, such as attorney and inspection fees and insurance costs. Less than 40 percent believe the idiom “As long as you can afford the monthly payments, you can get a mortgage;” the bulk of respondents understand the need to have sufficient funds for living expenses and savings. The majority (80 percent) also are aware the buyers can receive down payment assistance from parents of other relatives.
“For the millions of consumers who express a desire to own a home, it’s essential that lending and housing professionals provide clear, simple information to build consumer confidence about buying a home,” he said.