By Ryan Velez
For the vast majority of people out there, buying a home is the most drastic financial decision that they will make. As a result, there is a lot of information swirling out there, and not all of it should be listened to. Some of it is outdated for the current housing market. Some of it is put out there by unscrupulous people seeking to lead would-be owners down the wrong path. And some of it is perfectly legitimate but doesn’t match your financial situation or goals. Black Enterprise is trying to clear the air by disproving some common myths held about owning a home.
For one, many people think that a credit score is a true gatekeeper to home ownership. In Wells Fargo’s How America Views Homeownership survey, nearly two-thirds of people felt they needed a very good credit score to buy a home, and one-third of people felt that this score had to be over 780. However, 780 is generally more of an “excellent” credit score, and anything over 660 is considered “good.” On top of this, there are also several different financing programs available for people with various credit scores or credit histories. Don’t forget, a lender will also look at your entire financial history as well as your score, so don’t think less-than-perfect credit means the end of your homeowner dream.
Another thing people feel holds them back is a large down payment. Over a third of people in the survey thought a down payment of 20% was required, and African-Americans (48%) and Hispanics (50%) had even higher numbers. Again, this is a case at not looking at all the options on the table. Some financing programs allow qualifying homebuyers to put down as little as 3%. In addition, monetary gifts from family and friends can go towards it. A home mortgage consultant is a good starting point to know your options.
On the topic of mortgages, while income is important for qualifying for a home loan, there are financing programs that allow for a wide range of incomes. What you need to do is prove that you have the ability to pay. Income, assets, debt-to-income ratio, credit history, credit scores, and the amount of the loan compared to the value of the property all come together to create a full picture for a loan officer. Take a chance and see what options meet your status before assuming a home is out of reach.