Those applying for a mortgage for the first time may find it can be a daunting process. The information available either via Internet or even word of mouth can be misleading or flat out incorrect. Some of this information can be all that is needed to discourage buyers from seeking out a mortgage due to a fear of it being too complicated a process. Additionally, some of this misinformation can lead to potential buyers making unwise choices and suffering financially.
One of the first myths out there is that a buyer will need perfect credit to purchase a home in this market. For many people, that simply is not a reachable goal at the current time. Previous circumstance and ripple effect from the earlier housing crisis have left many with less than perfect credit. The majority of buyers, about 28 percent of all applying for a mortgage fall in the area of good credit with a score of 650 to 750 according to Fair Issac Corp., a company that maintains the FICO scoring system. These scores are currently enough to get a decent rate, although the closer you get to 750 the lower the rate will be. For those who are below 650, it may be more difficult to find a mortgage with lower rates, but mortgages for these scores are available through smaller banks and larger lenders alike, including FHA lenders.
Another area that has been misrepresented is that of the down payment. For a while after the housing crash, lenders were requiring a down payment of 20 percent or more to obtain a mortgage. This practice left many without the funds to purchase a home and made home ownership out of reach. Recent relaxation of the rules for the lending criteria as well as new government programs can help people obtain a mortgage for as little as 3.5 percent down, a far cry from 20 percent. This change alone has allowed many who were putting off purchasing a new home back on the playing field.
The challenges that have faced potential homeowners in the past have slowly eased to allow more to enter the market. It is a great time to purchase a home while rates are low and inventory in the Scottsdale housing market is high!