In a recent article by the Wharton School of Business at the University of Pennsylvania , it was revealed that some Millennials are not looking to purchase a home simply because they don’t believe they canqualify for a mortgage.
The article quoted Jessica Lautz, the National Association of Realtors ’ Managing Director of Survey Research , as saying that there is a significant population that does not think they will be approvedfor a mortgage and doesn’t even try . The article also quoted Fannie Mae CEO Tim Mayopoulos :
“I do think that there’s a sense out there in the marketplace among borrowers that credit may not be available, especially for people with lower credit scores.”
So what credit score is necessary?
A recent survey reported that two-thirds of the respondents believe they need a very good credit score to buy a home, with 45 percent thinking a “good credit score” is over 780.
In actuality, the FICO score on closed loans (as reported by Ellie Mae ) is much lower and has been dropping over the last several months.
Bottom Line
Millennials whoare considering a home purchase should get advice from a local real estate or mortgage professional now. They may be surprised how much the requirements for a mortgage have eased.
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