Is it getting harder for first-time home buyers to get a mortgage? According to Realtor.com, that is the perception among surveyed first-time buyers, who are feeling less confident about their ability to buy a home.
Here are highlights from the survey:
9% of buyers report difficulty qualifying for a mortgage
19.5% of buyers say they need to improve their credit score before buying a home
25% of buyers say they do not have enough funds for a down payment
A year ago, first-time buyers reported the same concerns, but on a smaller scale. In 2015, 5.6% of buyers claimed difficulty in qualifying for a mortgage; 9.7% said they needed to improve their credit, and 16% lacked enough money for a down payment.
What the survey does not tell us, is the “why” behind the rise in home buying doubts. It’s possible that higher home prices have make it harder for buyers to meet loan approval criteria, especially when it comes to saving for a down payment, and meeting debt-to-income ratios.
Credit Scores Trending Higher for Home Buyers
Despite this, mortgages have become a little easier to get during 2016, according to The Mortgage Reports. The mortgage industry news site says that about 76% of mortgage applications are making it through to closing. A couple years ago, only about 63% of mortgage applications make it through to closing. Statistically, the mortgage loan environment hasn’t been this productive in 10 years.
Yet the credit scores on approved mortgages have been trending higher. Home buyers using FHA mortgages are averaging a credit score of 686. This is amazing when you consider that today’s FHA credit score minimum is back down to 580. Meanwhile, the average credit score for a Conventional mortgage is trending at 754.
Are mortgage loans harder to get this year? Or are home buyers coming to the lender’s desk armed with their best credit score? The answer isn’t clear yet, but there’s no harm in first-time home buyers being well-prepared. Rather than guess your home buying ability, please contact us for referral to a Chicago mortgage lender!
StartingPoint Realty – the first-time Chicago home buyer advantage!
StartingPoint Realty specializes in helping first-time home buyers throughout Chicago and the Northwest suburbs. We provide expert guidance throughout the entire home buying process! We can also refer you to trustworthy, local lenders who will explain your mortgage options.
Be sure to attend a free home buying seminar for a valuable education about Chicago home buying! There’s no sales pitch, and no obligation. Always feel welcome to contact us for help with your Chicago home buying questions!
Ryan Gable Broker/CEO Starting Point Realty
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