Nearly two-thirds of Americans recently surveyed say they believed a stellar credit score was necessary to purchase a home, and more than 40 percent said they needed a down payment equal to or at least 20 percent of the purchase price to buy a home today, according to a new survey released by Wells Fargo.
Back in April, 56% of all potential home buyers said they were waiting to purchasebecause they feared being rejected by lenders.
However, the nation’s largest mortgage lender says many customers believe it’s much more difficult to get a mortgage than it really is.
Franklin Codel, Wells Fargo’s head of mortgage production, notes that the bank has lowered minimum credit scores for loans backed by the government in an effort to expand its eligible borrower pool.
“When we expanded FICO ranges, we saw not only an increase in applications but we also saw an increase in approval rates,” Codel says.
The lender acknowledges that mortgage credit has tightened since the financial crisis. But buyers’ fear of being turned down by a bank are needlessly keeping some of them out of the housing market, analysts note.
For example, in 2013, 19 percent of families said they did not apply for a consumer loan due to fear of rejection – which is above the 16.4 percent rate of families who actually are turned down for credit, according to a recent Federal Reserve survey.
Source: “Wells Fargo Finds Mortgage Myths Hamper Home Purchases,” Reuters (Sept. 15, 2014)
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