March 2021 – Albuquerque Real Estate

Is Homeownership Still Considered Part of the American Dream?

Since the birth of our nation, homeownership has always been considered a major piece of the American Dream. As Frederick Peters reports in Forbes:

“The idea of a place of one’s own drives the American story. We became a nation out of a desire to slip the bonds of Europe, which was still in many respects a collection of feudal societies. Old rich families, or the church, owned all the land and, with few exceptions, everyone else was a tenant. The magic of America lay not only in its sense of opportunity, but also in the belief that life could in every way be shaped by the individual. People traveled here not just for religious freedom, but because in America anything seemed possible.”

Additionally, a research paper released just prior to the shelter-in-place orders issued last year concludes:

“Homeownership is undeniably the cornerstone of the American Dream, and is inseparable from our national ethos that, through hard work, every American should have opportunities for prosperity and success. It is the stability and wealth creation that homeownership provides that represents the primary mechanism through which many American families are able to achieve upward socioeconomic mobility and greater opportunities for their children.”

Has the past year changed the American view on homeownership?

Definitely not. A survey of prospective homebuyers released by realtor.com last week reveals that becoming a homeowner is still the main reason this year’s first-time homebuyers want to purchase a home. When asked why they want to buy, three of the top four responses center on the financial benefits of owning a home. The top four reasons for buying are:

59% – “I want to be a homeowner”
33% – “I want to live in a space that I can invest in improving”
31% – “I need more space”
22% – “I want to build equity”

Millennials believe most strongly in homeownership.

The survey also reports that 62% of millennials say a desire to be a homeowner is the main reason they’re buying a home. This contradicts the thinking of some experts who had believed millennials were going to be the first “renter generation” in our nation’s history.

While reporting on the survey, George Ratiu, Senior Economist at realtor.com, said:

“Americans, even millennials who many thought would never buy, have a strong preference for homeownership for the same reasons many generations before them have — to invest in a place of their own and in their communities, and to build a solid financial foundation for themselves and their families.”

Odeta Kushi, Deputy Chief Economist for First American, also addresses millennial homeownership:

“Millennials have delayed marriage and having children in favor of investing in education, pushing marriage and family formation to their early-to-mid thirties, compared with previous generations, who primarily made these lifestyle choices in their twenties…Delayed lifestyle choices delay the desire for homeownership.”

Kushi goes on to explain:

“As more millennials get married and form families, millennials remain poised to transform the housing market. In fact, the housing market is already experiencing the earliest gusts of the tailwind.”

Bottom Line

As it always has been and very likely always will be, homeownership continues to be a major component in every generation’s pursuit of the American Dream.

Hakes Brothers: A local Albuquerque, NM Construction Company

Hakes Brothers: A local Albuquerque, NM Construction Company
(Transcript Snippet):
“Eric Corpuz: Well, and thank you for mentioning about, about the realtors and brokers, because we really truly feel like we are partners. And so you ever want to look for home new home construction, contact the Venturi team and let them know you’re interested in new home construction. I’m sure they’ll mention and bring us out to one of our communities, which right now we are building again an Albuquerque, which is actually in big news. We had started in Albuquerque and had closed out that first development, which we called Durango at the trails, but now we’re back. We actually have home sites and we have started pre-sales and pretty soon those homes will start going up, but we have some spec homes that we’ve started to. And for those who want to move in a little quicker, and, but we still have lots left. If you want to start from scratch Tracy Venturi: And the benefit of starting from scratch, right? You get to pick your lot. You get to pick your color scheme, your finishes, your tile. Yes, that’s fun. Right?

Eric Corpuz: I mean, you know, we, you know, when we we’re we’re production builder, but we know one of the things about customizing our homes should come from the buyer. And now you have a chance to go into a beautiful design center and meet with Deanna Mathis. An amazing, amazing designer. She’ll have one-on-one with you and you can pick your colors, your backsplashes you’re granted all those fun things. And I make that home actually yours. Tracy Venturi: And you know, one of the things that I know about that, and Deanna is she’s not going to let you do a bad job, right? She’s going to say, you know what, that tile with this countertop, isn’t going to be the best, right? She’s going to say, here’s let me help you. What, what in general do you like, let me pull a few things and you’ll be wild, right?

Eric Corpuz: Absolutely. And you know, what, what might be daunting to some folks is they’re afraid that they go into a place anywhere and they overspend, or again, to that situation, you can walk in and say, you know what, Deanna, this is my budget. This is where I’d like to be. And she does an amazing job of putting together all these colored choices that work within that budget. And that’s what I think is the best part of it.

Tego Venturi: Just to clarify for folks that may not understand we use, you said spec home, what does that mean?

Eric Corpuz: So it’s an inventory home. It’s a home that we decided to build on the lot to sell, hopefully before it’s complete, but sometimes it gets to completion. We pick the four plan. We pick the elevation in the outside. Is it a contemporary, or is it going to have a pitch roof for things like that? We pick the option choices and the colors that go into the home. And, but, you know, we’re not strangers to this. And we, we build these beautiful models that everyone loves to see. And we say, I’m going to put a model in the field and that’s kind of our mindset.

https://welcomehomeabq.com
Tracy & Tego Venturi
Venturi Realty Group
Keller Williams
1119 Alameda Blvd NW
Albuquerque, NM 87114
(505) 448-8888
info@welcomehomeabq.com

Hakes Brothers: A local Albuquerque, NM Construction Company

(Transcript Snippet): “

Eric Corpuz:

Well, and thank you for mentioning about, about the realtors and brokers, because we really truly feel like we are partners. And so you ever want to look for home new home construction, contact the Venturi team and let them know you’re interested in new home construction. I’m sure they’ll mention and bring us out to one of our communities, which right now we are building again an Albuquerque, which is actually in big news. We had started in Albuquerque and had closed out that first development, which we called Durango at the trails, but now we’re back. We actually have home sites and we have started pre-sales and pretty soon those homes will start going up, but we have some spec homes that we’ve started to. And for those who want to move in a little quicker, and, but we still have lots left. If you want to start from scratch

Tracy Venturi:

And the benefit of starting from scratch, right? You get to pick your lot. You get to pick your color scheme, your finishes, your tile. Yes, that’s fun. Right?

Eric Corpuz:

I mean, you know, we, you know, when we we’re we’re production builder, but we know one of the things about customizing our homes should come from the buyer. And now you have a chance to go into a beautiful design center and meet with Deanna Mathis. An amazing, amazing designer. She’ll have one-on-one with you and you can pick your colors, your backsplashes you’re granted all those fun things. And I make that home actually yours.

Tracy Venturi:

And you know, one of the things that I know about that, and Deanna is she’s not going to let you do a bad job, right? She’s going to say, you know what, that tile with this countertop, isn’t going to be the best, right? She’s going to say, here’s let me help you. What, what in general do you like, let me pull a few things and you’ll be wild, right?

Eric Corpuz:

Absolutely. And you know, what, what might be daunting to some folks is they’re afraid that they go into a place anywhere and they overspend, or again, to that situation, you can walk in and say, you know what, Deanna, this is my budget. This is where I’d like to be. And she does an amazing job of putting together all these colored choices that work within that budget. And that’s what I think is the best part of it.

Tego Venturi:

Just to clarify for folks that may not understand we use, you said spec home, what does that mean?

Eric Corpuz:

So it’s an inventory home. It’s a home that we decided to build on the lot to sell, hopefully before it’s complete, but sometimes it gets to completion. We pick the four plan. We pick the elevation in the outside. Is it a contemporary, or is it going to have a pitch roof for things like that? We pick the option choices and the colors that go into the home. And, but, you know, we’re not strangers to this. And we, we build these beautiful models that everyone loves to see. And we say, I’m going to put a model in the field and that’s kind of our mindset.

Tego Venturi:

Yeah, yeah, yeah. Got it. So you build a model when you do, when you start a neighborhood, you guys obviously office there. I don’t know if people are familiar with this whole model with, with new construction or what we call production neighborhoods, where, you know, you guys have 20, 30, 40, 50, a hundred lots, you build a couple homes, maybe two have as models, but also your office. And then you start doing sales out of there. You’ll start doing some specs. And then in the meantime, you’ll also be selling pre-sales and I want to perfect. That was it. Yeah.

Tracy Venturi:

We didn’t talk about the different parts of town yet. So sorry about that. We definitely different neighborhoods that you’re in.

Eric Corpuz:

I didn’t announce our grand opening today is Saturday. So at 11:00 AM our Mariposa grand opening, amazing 3012 square foot single story home. And this home is on 2,400 desert Marygold. And we will have our grand opening from 11 to three with food and prizes and all kinds of nice stuff. And you get to meet the Hakes folks and and see a beautiful model just in its pristine glory.

Tego Venturi:

I want to say something about that. You said, Hey, folks is you Hakes brothers is truly a family business,

Tego Venturi:

The Hakes brothers, the brothers that’s correct.

Tracy Venturi:

D.R. Horton is Horton, but that’s true. We don’t never get Mr. D.R. Over at our grand opening.

Tego Venturi:

Martin has been in Albuquerque a few times, but you know, they’re, they’re a national company again. No, yeah, yeah, no, exactly, exactly. So anyway, we, we do appreciate that. In fact, Tracy, you had, you called one of the family members the other day on some stuff and they were wonderful. Right? Absolutely. And so okay. So you’re in Mariposa, Mariposa. Let me just, just, cause I there’s a lot of people that may be listening to say Mariposa, they don’t remember the ads from five years ago with Mariposa.

Tracy Venturi:

Those are like 15 years ago now. 20

Tego Venturi:

Gosh. Yeah. So Mariposa is North West really entire, the entire metropolitan area. So it’s Northwest Rio Rancho. If you’re, you’re taking five 50 North or Northwest toward Cuba, the Haim is it’s going to be right, right on the way. But it’s at, it’s at Unser five 50 basically, or just to Southwest,

Eric Corpuz:

Right. A few miles from the from 550 and actually in between there and 550, we have another community and it’s called mountain Hawk. What a wonderful community. Again, you’re out there. You’re not on top of the city of amazing things to look out. It’s quiet and walking trails and parks and you can buy a home there. You can actually buy a home there for $300,000

Tego Venturi:

Brand new that is unheard of. And we’re going to talk about it later in the show. I was on a panel with some of the builder representatives and just what it takes now today in this market, in this world, what it cost to build a home in $300,000 house, that’s kind of starting price these days.

Tracy Venturi:

Well, definitely starting price for new construction. So we’re in North Rio Rancho. We have one other neighborhood there for sure.

Eric Corpuz:

My original out there Lomas and Cantadas in the Chanset Hills. So I’ve been out there for a while already. We were going to new phase out there which is a continuation of an original phase called 2-E. And this probably means anything to me, but it’s out there and enchanted Hills in that alumnus and Cantatas area, again, we’re heading a little Southwest from where we already have building. And I’m again, right now I have untouched homes and why I say that no one has purchased yet because we just released them. So whoever comes up now, it gets to your pick.

Tego Venturi:

This is in Lomas and Cantatas.

Eric Corpuz:

That’s correct. Yeah.

Tracy Venturi:

Wow. That’s really great because picking your lot can be fun and, and choosing what your shape and where on the block and

Tego Venturi:

Well, I’m picking your lot when there’s none very limited choices. It’s not fun. So yes. Get out there now. That’s right. Come out there now. Yeah. I was going to say, we need to do that.

Eric Corpuz:

My number is (505) 440-5812. That’s (505) 440-5812. That is my direct number. I do answer my phone. I will accept texts. Of course. And I will set up appointments at any time. Just let us know that don’t need any of the week that we do not work is Sundays, but other than that, I’m available.

Tracy Venturi:

And I happened to appreciate that about Hicks brothers. It’s hard when I have a buyer on a Sunday and I’m like, I’m going to appreciate it and we’ll go on Monday. We’re not going to leave them out because they have great houses. So yeah. So now we we’ve been in Rio Rancho, where else has Hakes brothers?

Eric Corpuz:

So again, we talked about Rio Rancho. We have another area in Rio Rancho called Suez estates, and that is by Rio Rancho high off of a Brazo road. And we have an area there called Suez RO, which is a brand new street where we have plenty of spec homes available and they range from 2,119 square foot, three car garage to 2,740 square foot, five square foot, five bedroom home

Tracy Venturi:

Having five bedroom home option is great. We get that request pretty regular.

Tego Venturi:

We’ve seen high demand in our market lately for five bedroom homes. And I’m sure it it’s a little bit of residual from the COVID effect.

Tracy Venturi:

Yeah. So we are the Venturi Realty group, Keller Williams Realty. And you can call us at four, four, eight 88, 88 right there. Yeah. There’s the phone number right over my head. Four, four eight, eight, eight, eight, eight. And we can schedule a time for you to go see homes with Eric, for sure. But okay. Now we’re still in Rio Rancho more neighborhoods.

Eric Corpuz:

Well, the and you know, there’s always plans and I’ll just say there’s, there’s more on the horizon. But until our finalized, I’m not going to mention, but yeah, w we have, we have Hicks brothers has made a commitment to Albuquerque Rio Rancho. And after we came up here a few years ago, we decided that this is where we were going to really, really express ourselves. And so we have a, again, a commitment to picking up as much beautiful home sites as possible over the next few years and keep building these beautiful homes for you

Tracy Venturi:

All. Awesome. Great. So general price ranges. You don’t have to be specific.

Eric Corpuz:

If you need a home anywhere, brand new from 300 to out of Mariposa, you could get around a 550, 560 range. We certainly have in between which most folks right now seem to necessarily, and we have plenty of homes, plenty of models.

How a Change in Mortgage Rate Impacts Your Homebuying Budget

Mortgage rates are on the rise this year, but they’re still incredibly low compared to the historic average. However, anytime there’s a change in the mortgage rate, it affects what you can afford to borrow when you’re buying a home. As Sam Khater, Chief Economist at Freddie Mac, shares:

“Since January, mortgage rates have increased half a percentage point from historic lows and home prices have risen, leaving potential homebuyers with less purchasing power.” (See graph below):

When buying a home, it’s important to determine a monthly budget so you can plan for and understand what you can afford. However, when you need to stick to your budget, even a small increase in the mortgage rate can make a big difference.

According to the National Association of Realtors (NAR), today, the median existing-home price is $313,000. Using $300,000 as a simple number close to the median price, here’s an example of how a change in mortgage rate impacts your monthly principal and interest payments on a home.If, for example, you’re getting ready to buy a home and know your budget allows for a monthly payment of $1200-1250 (marked in gray on the table above), every time the mortgage rate increases, the loan amount has to decrease to keep your monthly cost in range. This means you may have to look for lower-priced homes as mortgage rates go up if you want to be able to maintain your budget.

In essence, it’s ideal to close on a home loan when mortgage rates are low, so you can afford to borrow more money. This gives you more purchasing power when you buy a home. Mark Fleming, Chief Economist at First American, explains:

“Monthly payments have remained manageable despite soaring home prices because of low mortgage rates. In fact, monthly payments remain below the $1,250 to $1,260 range that we saw in both fall 2018 and spring 2019, but they are on track to hit that level this spring.

Although they remain low, mortgage rates have begun to increase and are expected to rise further later in the year, thus affordability will test buyer demand in the months ahead and likely help slow the pace of price growth.”

Today’s mortgage rates are still very low, but experts project they’ll continue to rise modestly this year. As a result, every moment counts for homebuyers who want to secure the lowest mortgage rate they can in order to be able to afford the home of their dreams.

Bottom Line

Thanks to low mortgage rates, the spring housing market’s in bloom for buyers – but these favorable conditions may not last for long. Let’s connect today to start the homebuying process while your purchasing power is still holding strong.

What It Means To Be in a Sellers’ Market

If you’ve given even a casual thought to selling your house in the near future, this is the time to really think seriously about making a move. Here’s why this season is the ultimate sellers’ market and the optimal time to make sure your house is available for buyers who are looking for homes to purchase.

The latest Existing Home Sales Report from The National Association of Realtors (NAR) shows the inventory of houses for sale is still astonishingly low, sitting at just a 2-month supply at the current sales pace.

Historically, a 6-month supply is necessary for a ‘normal’ or ‘neutral’ market in which there are enough homes available for active buyers (See graph below):When the supply of houses for sale is as low as it is right now, it’s much harder for buyers to find homes to purchase. As a result, competition among purchasers rises and more bidding wars take place, making it essential for buyers to submit very attractive offers.

As this happens, home prices rise and sellers are in the best position to negotiate deals that meet their ideal terms. If you put your house on the market while so few homes are available to buy, it will likely get a lot of attention from hopeful buyers.

Today, there are many buyers who are ready, willing, and able to purchase a home. Low mortgage rates and a year filled with unique changes have prompted buyers to think differently about where they live – and they’re taking action. The supply of homes for sale is not keeping up with this high demand, making now the optimal time to sell your house.

Bottom Line

Home prices are appreciating in today’s sellers’ market. Making your home available over the coming weeks will give you the most exposure to buyers who will actively compete against each other to purchase it.

2021 Real Estate Myth Buster [INFOGRAPHIC]

Some Highlights

There are a lot of misconceptions about buying or selling a home today, making it challenging to know exactly how to navigate the current real estate landscape.
Here’s a little clarity when it comes to 5 common myths about the 2021 housing market.
Let’s connect to discuss your needs and so you can decipher facts from fiction in our local market.

Buyer & Seller Perks in Today’s Housing Market

Right now, the housing market is full of outstanding opportunities for both buyers and sellers. Whether you’re thinking of buying your first home, moving up to a bigger one, or selling so you can downsize this spring, there are perks today that are powering big moves for people across the country. Here are the top two to keep on the radar this season.

The Biggest Perk for Buyers: Low Mortgage Rates

Today’s most compelling buyer incentive is low mortgage interest rates. The 30-year fixed-rate is now averaging just over 3%. While that’s slightly higher than the record-lows from 2020 and earlier this year, it’s still way lower than historic norms, making purchasing a home an ongoing perk for hopeful buyers (See graph below):This is a huge advantage for buyers and helps to make owning a home attainable for more households – and there’s good reason to strive for homeownership. The latest Homeowner Equity Report from CoreLogic shows how homeowners saw major gains in their net worth last year, all thanks to owning a home. Frank Martell, President and CEO of CoreLogic, explains:

“Positive factors like record-low interest rates and a booming housing market encouraged many families to enter homeownership. This growing bank of personal wealth that homeownership affords was noticed by many but in particular for first-time buyers who want a piece of the cake. As a result, we may see more of those currently renting start to enter the market in the near future.”

Low mortgage rates are a plus for buyers right now, but experts forecast we’ll see them continue to rise as the year goes on. If you’re ready to purchase a home, it’s wise to get started on the process soon so you can secure today’s comparatively low rate.

The Biggest Perk for Sellers: Low Inventory

Today, there are simply not enough houses on the market for the number of buyers looking to purchase them, and it’s creating a serious sellers’ market. According to Danielle Hale, Chief Economist at realtor.com:

“Total active inventory continues to decline, dropping 50 percent. With buyers active in the market and sellers still slow to put homes up for sale, homes are selling quickly and the total number actively available for sale at any point in time continues to decline.” (See map below):

The lack of houses for sale continues to challenge the market, and with low mortgage rates fueling buyer demand, homes are hard for buyers to find today. According to the latest Realtors Confidence Index Survey by the National Association of Realtors (NAR), the average house is now receiving 4.1 offers and is on the market for only 20 days.

Buyers are clearly eager to purchase, and because of the shortage of inventory available, they’re often entering bidding wars. This is one of the factors keeping home prices strong and giving sellers leverage in the negotiation process.

Homeowners who are in a position to sell shouldn’t wait to make their move. There’s a light at the end of the tunnel for today’s inventory shortage, so listing this spring will get your house on the market when conditions are most favorable. With low inventory and high buyer demand, homeowners can potentially earn a greater profit on their houses and sell them quickly in the fast-paced spring market.

Bottom Line

Whether you’re thinking about buying or selling a home, there are major perks available in today’s housing market. Let’s connect today to discuss how these favorable conditions play to your advantage in our local area.

Why You Should Think About Listing Prices Like an Auction’s Reserve Price

For generations, the homebuying process never really changed. The seller would try to estimate the market value of the home and tack on a little extra to give themselves some negotiating room. That figure would become the listing price of the house. Buyers would then try to determine how much less than the full price they could offer and still get the home. The asking price was generally the ceiling of the negotiation. The actual sales price would almost always be somewhat lower than the list price. It was unthinkable to pay more than what the seller was asking.

Today is different.

The record-low supply of homes for sale coupled with very strong buyer demand is leading to a rise in bidding wars on many homes. Because of this, homes today often sell for more than the list price. In some cases, they sell for a lot more.

According to the Home Buyers and Sellers Generational Trends report just released by the National Association of Realtors (NAR), 45% of buyers paid full price or more.

You may need to change the way you look at the asking price of a home.

In this market, you likely can’t shop for a home with the old-school mentality of refusing to pay full price or more for a house.

Because of the shortage of inventory of houses for sale, many homes are actually being offered in an auction-like atmosphere in which the highest bidder wins the home. In an actual auction, the seller of an item agrees to take the highest bid, and many sellers set a reserve price on the item they’re selling. A reserve price is the minimum amount a seller will accept as the winning bid.

When navigating a competitive housing market, think of the list price of the house as the reserve price at an auction. It’s the minimum the seller will accept in many cases. Today, the asking price is often becoming the floor of the negotiation rather than the ceiling. Therefore, if you really love a home, know that it may ultimately sell for more than the sellers are asking. So, as you’re navigating the homebuying process, make sure you know your budget, know what you can afford, and work with a trusted advisor who can help you make all the right moves as you buy a home.

Bottom Line

Someone who’s more familiar with the housing market of the past than that of today may think offering more for a home than the listing price is foolish. However, frequent and competitive bidding wars are creating an auction-like atmosphere in many real estate transactions. Let’s connect so you have the best advice on how to make a competitive offer on a home in our local market.

Should We Fear the Surge in Cash-Out Refinances?

Freddie Mac recently released their Quarterly Refinance Statistics report which covers refinances through 2020. The report explains that the dollar amount of cash-out refinances was greater in 2020 than in recent years. A cash-out refinance, as defined by Investopia, is:

“a mortgage refinancing option in which an old mortgage is replaced for a new one with a larger amount than owed on the previously existing loan, helping borrowers use their home mortgage to get some cash.”

The Freddie Mac report led to articles like the one published by The Real Deal titled, House or ATM? Cash-Out Refinances Spiked in 2020, which reports:

“Americans treated their homes like ATMs last year, withdrawing $152.7 billion amid a cash-out refinancing spree not seen since before the 2008 financial crisis.”

Whenever you combine the terms “spiked,” “homes like ATMs,” and “financial crisis,” it conjures up memories of the housing crash we experienced in 2008.

However, that comparison is invalid for three reasons:

1. Americans are sitting on much more home equity today.

Mortgage data giant Black Knight just issued information on the amount of tappable equity U.S. homeowners with a mortgage have. Tappable equity is the amount of equity available for homeowners to use and still have 20% equity in their home. Here’s a graph showing the findings from their report:In 2006, directly before the crash, tappable home equity in the U.S. topped out at $4.6 trillion. Today, that number is $7.3 trillion.

As Black Knight explains:

“At year’s end, some 46 million homeowners held a total $7.3 trillion in tappable equity, the largest amount ever recorded…That’s an increase of more than $1.1 trillion (+18%) since the end of 2019, the largest percentage gain since 2013 and – you guessed it – the largest dollar value gain in history, to boot. All in all, it works out to roughly $158,000 on average per homeowner with tappable equity, up nearly $19,000 from the end of 2019.”

2. Homeowners cashed-out a much smaller amount this time.

In 2006, Americans cashed-out a total of $321 billion. In 2020, that number was less than half, totaling $153 billion. The $321 billion made up 7% of the total tappable equity in the country in 2006. On the other hand, the $153 billion made up only 2% of the total tappable equity last year.

3. Fewer homeowners tapped their equity in 2020 than in 2006.

Freddie Mac reports that 89% of refinances in 2006 were cash-out refinances. Last year, that number was less than half at 33%. As a percentage of those who refinanced, many more Americans lowered their equity position fifteen years ago as compared to last year.

Bottom Line

It’s true that many Americans liquidated a portion of the equity in their homes last year for various reasons. However, less than half of them tapped their equity compared to 2006, and they cashed-out less than one-third of that available equity. Today’s cash-out refinance situation bears no resemblance to the situation that preceded the housing crash.

What Credit Score Do You Need for a Mortgage?

According to data from the most recent Origination Insight Report by Ellie Mae, the average FICO® score on closed loans reached 753 in February. As lending standards have tightened recently, many are concerned over whether or not their credit score is strong enough to qualify for a mortgage. While stricter lending standards could be a challenge for some, many buyers may be surprised by the options that are still available for borrowers with lower credit scores.

The fact that the average American has seen their credit score go up in recent years is a great sign of financial health. As someone’s score rises, they’re building toward a stronger financial future. As more Americans with strong credit enter the housing market, we see a natural increase in the FICO® score distribution of closed loans, as shown in the graph below:If your credit score is below 750, it’s easy to see this data and fear that you may not be able to qualify for a mortgage. However, that’s not always the case. While the majority of borrowers right now do have a score above 750, there’s more to qualifying for a mortgage than just the credit score, and there are still options that allow people with lower credit scores to buy their dream home. Here’s what Experian, a global leader in consumer and business credit reporting, says:

Federal Housing Administration (FHA) loans: “With a 3.5% down payment, homebuyers may be able to get an FHA loan with a 580 credit score or higher. If you can manage a 10% down payment, though, that minimum goes as low as 500.”
Conventional loans: “The most popular loan type typically comes with a 620 minimum credit score.”
S. Department of Agriculture (USDA) loans: “In general, lenders require a minimum credit score of 640 for a USDA loan, though some may go as low as 580.”
S. Department of Veterans Affairs (VA) loans: “VA loans don’t technically have a minimum credit score, but lenders will typically require between 580 and 620.”

There’s no doubt a higher credit score will give you more options and better terms when applying for a mortgage, especially when lending is tight like it is right now. When planning to buy a home, speaking to an expert about steps you can take to improve your credit score is essential so you’re in the best position possible. However, don’t rule yourself out if your score is less than perfect – today’s market is still full of opportunity.

Bottom Line

Don’t let assumptions about whether your credit score is strong enough put a premature end to your homeownership goals. Let’s connect today to discuss the options that are best for you.