Will Home Buyers with Low Credit Scores Qualify for a Mortgage Loan?

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Will Home Buyers with Low Credit Scores Qualify for a Mortgage Loan?

Many potential homeowners are not making the move to purchase because they don’t feel they have the ability to receive a mortgage loan. Many assume that perfect credit ratings or large down payments are required; however, these myths simply aren’t true. According to Ellie Mae’s Origination Report, the average FICO score in May was 724 for closed loans; it was a number much lower than the 750-800 many homeowners were expecting.

Check out graph below of FICO Scores for approved loans in the month of May:

Will Home Buyers with Low Credit Scores Qualify for a Mortgage Loan?

The chart shows that 54.9% of homeowners received approval on their mortgage loan with FICO scores between 600 and 749.

A lot of experts in the real estate field have expressed that if more potential homeowners knew about these numbers and their ability to receive a mortgage loan at or above 600, then the chart would shift even further to the left.

Jonas Moe, Vice President of Ellie Mae encouraged home buyers not to assume they cannot acquire a mortgage loan and instead encourages them to learn about their options:

“The high median credit score is due to many millennials believing they won’t qualify with the score they have – and are therefore waiting to apply for a mortgage until they have the score they think they need.”

CoreLogic’s most recent MarketPulse report agreed that the median FICO score isn’t always helpful information:

Will Home Buyers with Low Credit Scores Qualify for a Mortgage Loan?“The observed decline in originations could be a result of potential applicants being either too cautious or discouraged from applying, more so than tight underwriting as the culprit in lower mortgage activity.”

Millennials aren’t the only ones who are worried either; many people who own homes now are delaying finding a new home more suited to their current needs in fear that they too will not be able to acquire a mortgage loan.

So what is taken away from this?

Jonas Moe explains:

“Many potential home buyers are ‘disqualifying’ themselves. You don’t need a 750 FICO Score and a 20% down payment to buy.”

Bottom Line

If you are one of the many Americans who have always believed that a low credit score is stopping you from reaching your American dream, then it is time to talk! Allow our real estate professionals to guide you in your home buying process. Call us today at Showcase Realty at 704.997.3794 or you send us a message here! We would love to help make your home buying dreams a reality, do your search on our array of listing of Ballantyne Homes for Sale.

Still curious about current mortgage standings? Don’t miss Homeowners Regain Equity of Over 20% Report Reveals to help you understand where the market is going.

If you decide you don’t like your home we will sell it for free. *some conditions apply*

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