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2 Myths Holding Back Home Buyers

Freddie Mac recently released a report entitled, “Perceptions of Down Payment Consumer Research.” Their research revealed that,

 

“For many prospective homebuyers, saving for a down payment is the largest barrier to achieving the goal of homeownership. Part of the challenge for those planning to purchase a home is their perception of how much they will need to save for the down payment…

…Based on our recent survey of individuals planning to purchase a home in the next three years, nearly a third think they need to put more than 20% down.”

Myth #1: “I Need a 20% Down Payment”

Buyers often overestimate the funds needed to qualify for a home loan. According to the same report:

22% of renters and 31% of homeowners believe lenders require 20% or more of a home’s sale price as a down payment for a typical mortgage today. And,

“If a 20% down payment was required, 70% of those who were planning to buy a home in the next three years said it would delay them from purchasing and nearly 30% indicated they would never be able to afford a home.”  

While many believe at least 20% down is necessary to buy the home of their dreams, they do not realize programs are available which permit as little as 3%. Many renters may actually be able to enter the housing market sooner than they ever imagined!

Myth #2: “I Need a 780 FICO® Score or Higher to Buy”

Many either don’t know or are misinformed concerning the FICO® score necessary to qualify, believing a ‘good’ credit score is 780 or higher.

To debunk this myth, let’s take a look at Ellie Mae’s latest Origination Insight Report, which focuses on recently closed (approved) loans.2 Myths Holding Back Home Buyers | Simplifying The MarketAs indicated in the chart above, 52.4% of approved mortgages had a credit score of 600-749.

Bottom Line

Whether buying your first home or moving up to your dream home, knowing your options will make the mortgage process easier. Your dream home may already be within your reach.

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JERRY TORRES
TEAM

Sr. Mortgage Loan Originator | Vision One Mortgage, Inc
NMLS #365615
| Company NMLS 7861

“THE PERFORMANCE TEAM”




Cell: (626) 269-9945

Fax: (800) 339-5004

https://www.JerryTorres.Pro/

#TechieLoanOriginator | #JerryTorresPro

The Benefits of a 20% Down Payment

If you are in the market to buy a home this year, you may be confused about how much money you need to come up with for your down payment. Many people you talk to will tell you that you need to save 20% or you won’t be able to secure a mortgage.

The truth is that there are many programs available that let you put down as little as 3%. Those who have served our country could qualify for a Veterans Affairs Home Loan (VA) without needing a down payment.

These programs have cut the savings time that many families would need to compile a large down payment from five or more years down to a year or two. This allows them to start building family wealth sooner.

So then, why do so many people believe that they need a 20% down payment to buy a home? There has to be a reason! Today, we want to talk about four reasons why putting 20% down is a good plan, if you can afford it.

1. Your interest rate will be lower.

Putting down a 20% down payment vs. a 3-5% down payment shows your lender/bank that you are more financially stable, thus a good credit risk. The more confident your bank is in your credit score and your ability to pay your loan, the lower the rate they will be willing to give you.

2. You’ll end up paying less for your home.

The bigger your down payment, the lower your loan amount will be for your mortgage. If you are able to pay 20% of the cost of your new home at the start of the transaction, you will only pay interest on the remaining 80%. If you put down a 5% down payment, the extra 15% on your loan will accrue interest and end up costing you more in the long run!

3. Your offer will stand out in a competitive market!

In a market where many buyers are competing for the same home, sellers like to see offers come in with 20% or larger down payments. The seller gains the same confidence that the bank did above. You are seen as a stronger buyer whose financing is more likely to be approved. Therefore, the deal will be more likely to go through!

4. You won’t have to pay Private Mortgage Insurance (PMI)

Simply put, PMI is “an insurance policy that protects the lender if you are unable to pay your mortgage. It’s a monthly fee, rolled into your mortgage payment, that is required for all conforming, conventional loans that have down payments less than 20%.”

As we mentioned earlier, when you put down less than 20% to buy a home, your lender/bank will see your loan as having more risk. PMI helps them recover their investment in you if you are unable to pay your loan. This insurance is not required if you are able to put down 20% or more.

Many times, home sellers looking to move up to a larger or more expensive home are able to take the equity they earn from the sale of their house to put down 20% on their next home.

If you are looking to buy your first home, you will have to weigh the benefits of saving a 20% down payment vs. the time and cost of continuing to rent while you save that amount.

Bottom Line

If your plan for your future includes buying a home and you’re already saving for your down payment, let’s get together to help you decide what down payment size best fits with your long-term plan!

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JERRY TORRES
TEAM

Sr. Mortgage Loan Originator | Vision One Mortgage, Inc
NMLS #365615
| Company NMLS 7861

“THE PERFORMANCE TEAM”




Cell: (626) 269-9945

Fax: (800) 339-5004

https://www.JerryTorres.Pro/

#TechieLoanOriginator | #JerryTorresPro

How Quickly Can You Save Your Down Payment?

Saving for a down payment is often the biggest hurdle for a first-time homebuyer. Depending on where you live, median income, median rents, and home prices all vary. So, we set out to find out how long it would take to save for a down payment in each state.

Using data from HUD, Census and Apartment List, we determined how long it would take, nationwide, for a first-time buyer to save enough money for a down payment on their dream home. There is a long-standing ‘rule’ that a household should not pay more than 28% of their income on their monthly housing expense.

By determining the percentage of income spent renting in each state, and the amount needed for a 10% down payment, we were able to establish how long (in years) it would take for an average resident to save enough money to buy a home of their own.

According to the data, residents in Kansas can save for a down payment the quickest, doing so in just over 1 year (1.12). Below is a map that was created using the data for each state:

How Quickly Can You Save Your Down Payment? | Simplifying The Market

What if you only needed to save 3%?

What if you were able to take advantage of one of Freddie Mac’s or Fannie Mae’s 3%-down programs? Suddenly, saving for a down payment no longer takes 2 to 5 years, but becomes possible in less than a year in most states, as shown on the map below.

How Quickly Can You Save Your Down Payment? | Simplifying The Market

Bottom Line

Whether you have just begun to save for a down payment or have been saving for years, you may be closer to your dream home than you think! Let’s get together to help you evaluate your ability to buy today.

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JERRY TORRES
TEAM

Sr. Mortgage Loan Originator | Vision One Mortgage, Inc
NMLS #365615
| Company NMLS 7861

“THE PERFORMANCE TEAM”




Cell: (626) 269-9945

Fax: (800) 339-5004

https://www.JerryTorres.Pro/

#TechieLoanOriginator | #JerryTorresPro

Slaying the Largest Homebuying Myths Today [INFOGRAPHIC]

Slaying the Largest Homebuying Myths Today [INFOGRAPHIC] | Simplifying the Market

 

Some Highlights:

  • The average down payment for first-time homebuyers is only 6%!
  • Mortgage interest rates have been on the decline since November! Hop in now to lock in a low rate!
  • 88% of property managers raised their rents in the last 12 months!
  • The average credit score on approved loans continues to fall across many loan types!

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Jerry Torres Facebook Page Description: cid:image004.gif@01D172D6.89F11120 Jerry Torres WordPress Blog

JERRY TORRES
TEAM

Sr. Mortgage Loan Originator | Vision One Mortgage, Inc
NMLS #365615
| Company NMLS 7861

“THE PERFORMANCE TEAM”




Cell: (626) 269-9945

Fax: (800) 339-5004

https://www.JerryTorres.Pro/

#TechieLoanOriginator | #JerryTorresPro

Your Tax Refund Is The Key To Homeownership!

According to data released by the Internal Revenue Service (IRS), Americans can expect an estimated average refund of $3,143 this year when filing their taxes. This is down slightly from the average refund of $3,436 last year.

Tax refunds are often thought of as ‘extra money’ that can be used toward larger goals. For anyone looking to buy a home in 2019, this can be a great jump start toward a down payment!

The map below shows the average tax refund Americans received last year by state.

Your Tax Refund Is The Key To Homeownership! | Simplifying The Market

Many first-time buyers believe that a 20% down payment is required to qualify for a mortgage. Programs from the Federal Housing Authority, Freddie Mac, and Fannie Mae all allow for down payments as low as 3%. Veterans Affairs Loans allow many veterans to purchase a home with 0% down.

If you started your down payment savings with your tax refund check this year, how close would you be to a 3% down payment?

The map below shows what percentage of a 3% down payment is covered by the average tax refund by taking into account the median price of homes sold by state.Your Tax Refund Is The Key To Homeownership! | Simplifying The MarketThe darker the blue, the closer your tax refund gets you to homeownership! For those in Oklahoma looking to purchase their first homes, their tax refund could potentially get them 85% closer to that dream!

Bottom Line

Saving for a down payment can seem like a daunting task. But the more you know about what’s required, the more prepared you can be to make the best decision for you and your family! This tax season, your refund could be your key to homeownership!

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Jerry Torres Facebook Page Description: cid:image004.gif@01D172D6.89F11120 Jerry Torres WordPress Blog

JERRY TORRES
TEAM

Sr. Mortgage Loan Originator | Vision One Mortgage, Inc
NMLS #365615
| Company NMLS 7861

“THE PERFORMANCE TEAM”




Cell: (626) 269-9945

Fax: (800) 339-5004

https://www.JerryTorres.Pro/

#TechieLoanOriginator | #JerryTorresPro

3 Tips for Making Your Dream of Buying A Home Come True [INFOGRAPHIC]

3 Tips for Making Your Dream of Buying A Home Come True [INFOGRAPHIC] | Simplifying The Market

Some Highlights:

  • Setting up an automatic savings plan that saves a small amount of every check is one of the best ways to save without thinking too much about it.
  • Living within a budget right now will help you save money for down payments while also paying down other debts that might be holding you back.
  • What are you willing to cut back on to make your dreams of homeownership a reality?