A new survey by Bankrate.com has found that almost half of renters haven’t looked into buying a home because they believe they won’t qualify for a mortgage, but that isn’t always true, the company says.
“A lot of people make assumptions that they can’t afford to buy based on just some perceptions, and many have not taken the step to figure out how mortgage-ready they are,” Marietta Rodriguez, vice president of NeighborWorks America, a national home ownership program, said.
According to Bankrate.com, Hispanics are the most likely demographic to believe that their credit rating isn’t good enough to secure a loan. Conversely, the majority of black and white renters said they weren’t ready to buy a home at this moment in time.
The survey found that some 35 percent of renters don’t want to own a home yet. Pava Leyrer, COO for Northern Mortgage Services, said that’s most likely a lingering effect of the mid-2000’s housing crisis.
“A lot of people went through some deep pains in the past 10 years or less, such as foreclosures, job losses, or bankruptcy filings,” Leyrer said. “All of those things are traumatic in your life.”
Putting fears aside for a moment, a big number of renters said they believed they couldn’t afford a down payment on a home. However, the survey found that many have got the numbers wrong. About 20 percent of renters believe they need a down payment of between 11 and 20 percent of the property’s value, while others believe they need between 6 and 10 percent.
The truth, however, is that many people are able to qualify for an FHA-backed loan with a down payment of just 3.5 percent of the home’s value. They can also secure a conventional loan with just three percent, said Rob Chrane, president and CEO at Down Payment Resource in Atlanta.
“The biggest single issue is that consumers just don’t know these programs even exist,” explained Chrane. “If you don’t know of the possibility then you don’t know to ask people for help with it.”