Getting Potential Buyers Off the Fence...

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I get a lot of potential home buyers who log into my website to look at homes for sale, yet sometimes it can be difficult to get them off the fence to actually move forward with a purchase. Perhaps they are confused about what it takes to buy a home, In fact, the Aspiring Home Buyers Profile from the National Association of Realtors (NAR) found that is the case with a segment of the American public according to a report from

The survey shows that the main reason they can’t get off the fence is that they believe they can’t afford to buy a home. There are two issues to consider here, the down payment and they fear their FICO score may be too low.

According to a another survey by Laurel Road, the National Online Lender and FDIC-Insured Bank, consumers overestimate the down payment the need to qualify for a home loan.

The survey said that 53% of Americans are concerned about affording a home in today’s market. It also found that 46% don’t know about alternative down payment options, and 46% of millennials say they cannot afford a 20% down payment. The good news is a 20 percent down payment may not be required. I’ve seen conventional loans with 5 percent and even 3 percent down payments while an FHA loan is just 3.5 percent. Here in Utah County there are down payment assistance programs, including grants that can help with the down payment for those who qualify. Then, of course Utah Housing, Rural Housing and VA loans offer no down payment if you qualify.

The average price for a home in Utah County right now is nearly $383,500 and for condos and townhomes it’s nearing $224,340. So if you can get a 3 percent down payment conventional loan your out of pocket costs, including closing costs, inspections and appraisals would be approximately $24,000 for a single-family home. For the average condo or townhouse it would be around $14,000.

FHA loans require 3.5 percent down payments so out of pocket costs would be slightly higher.  Be careful if you’re looking at condos and townhomes. Not all of them allow FHA financing.

Also don’t forget to look for grants and other down payment assistance programs to help you buy, particularly if you qualify as a first-time buyer. You may also try adding some of those costs into the loan if the seller and the appraisal will allow it.

As for FICO scores an Ipsos survey found that 62% of respondents think they need great credit to buy a home, with 43% believing they need a credit score over 780. Actually, the average FICO scores are much lower than that, particularly for FHA mortgages.

The average conventional loan credit score closing in May, the last information available, was 753, and 676 for FHA mortgages. The average score for all loans was 724.