Don’t Disqualify Yourself… Over Half of All Loans Approved Have a FICO Score Under 750

The results of countless studies have shown that potential home buyers, and even current homeowners, have an inflated view of what is really required to qualify for a mortgage in today’s market.

One such study by the Wharton School of Business at the University of Pennsylvania, revealed that many Millennials have not yet considered purchasing a home, simply because they don’t believe they can qualify 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 approved for 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.”

Ellie Mae’s Vice President, Jonas Moe recently encouraged buyers to know their options before assuming that they do not qualify for a mortgage:

“Many potential home buyers are 'disqualifying' themselves. You don't need a 750 FICO Score and a 20% down payment to buy.”

So what credit score is necessary?

Below is a breakdown of the FICO Score Distribution of all closed (approved) loans in August from Ellie Mae’s latest Origination Report.

Over 50% of all approved loans had a FICO Score under 750. Many potential home buyers believe that they need a score over 780 to qualify.

Bottom Line

If owning a home of your own has always been a dream of yours and you are ready and willing to buy, find out if you are able to! Let’s get together to determine if your dreams can become a reality sooner than you thought!

Billionaire: Buy a Home… And if You Can, Buy a Second Home!

Three years ago, John Paulson gave a keynote address at the CNBC/Institutional Investor Conference. In his speech, he told those in attendance that he believes housing will continue its strong recovery for the next 4 to 7 years, saying that:

"The housing market has bottomed. It's not too late to get involved. I still think buying a home is the best investment any individual can make. Affordability is still at an all-time high."

When asked how the average person could take advantage of the current real estate market at the time, Paulson said:

Buy a home and, if you can, buy a second home.”

Two years ago, Paulson reiterated his statement, saying:

"I still think, from an individual perspective, the best deal investment you can make is to buy a primary residence that you're the owner-occupier of."

Who is John Paulson and why should you listen to him?

Paulson is the person who, back in 2005 & 2006, made a fortune betting that the subprime mortgage mess would cause the real estate market to collapse. He understands how the housing market works and knows when to buy and when to sell.

What do others think of Paulson?

According to Forbes, John Paulson is:

“A multibillionaire hedge fund operator and the investment genius.”

According to the Wall Street Journal, Paulson is:

“A hedge fund tycoon who made his name, and a fortune, betting against subprime mortgages when no one else even knew what they were.”

So… Is what he said still true?

The core reasons behind Paulson’s statements still ring true today, but why does he believe homeownership is such a great investment?

Paulson broke down the math of homeownership as an investment:

1. "Today financing costs are extraordinarily low.”

The latest numbers from Freddie Mac show us that you can still get a 30-year mortgage at historically low rates of under 4%.

2. “And if you put down, let's say, 10 percent and the house is up 5 percent,” as many experts predict, “then you would be up 50 percent on your investment."

How many are seeing a 50% return on a cash investment right now?

Paulson goes on to compare the long term financial benefits of owning versus renting:

3. “And you’ve locked in the cost over the next 30 years. And today the cost of owning is somewhat less than the cost of renting. And if you rent, the rent goes up every year. But if you buy a 30-year mortgage, the cost is fixed.”

Bottom Line

Whenever a billionaire gives investment advice, people usually clamor to hear it. This billionaire gave simple advice – if you don’t yet live in your own home, go buy one.