Welcome!




Expand Your Education with These Courses from
A Consumer Advocate Approach to Real Estate: Course 1.
Customer Relationship Building: Skills for Sales Success: Part Seven.
Territory Management: Skills for Sales Success: Part Eight.
BPOs: The Agent's Role in the Valuation Process.
Bundle 2: CIPS Elective Courses (US Version).

Gap in Mortgage Availability: One Third of Americans Highly Unlikely to Qualify for a Mortgage

Have a comment on this article? Share on Facebook!

RISMEDIA, September 28, 2010—Nearly one-third of Americans are unlikely to qualify for a mortgage because their credit scores are too low, making homeownership out of reach for many. This is according to an analysis of more than 25,000 loan quotes and purchase requests on Zillow Mortgage Marketplace during the first half of September. Borrowers with credit scores under 620 who requested purchase loan quotes for 30-year fixed, conventional loans were unlikely to receive even one loan quote on Zillow Mortgage Marketplace, even if they offered a relatively high down payment of 15-25%. Nearly one-third of Americans, or 29.3%, has a credit score this low, according to data provided by myFICO.com.

Meanwhile, the lowest interest rates went to mortgage borrowers who were among the 47% of Americans with excellent credit scores of 720 or above.

In the first half of September, borrowers with credit scores of 720 or above got an average low annual percentage rate (APR) of 4.3% for conventional 30-year fixed mortgages. Borrowers with mid-range credit scores between 620 and 719 received APRs between 4.73-4.44%, with the APR rising as credit score drops. Those with credit scores below 620 received too few loan quotes to calculate average low APR.

For those with mid-range credit scores of 620-719, improving one’s credit score can mean a significant savings in interest over time. For each 20-point credit score increase, the average low APR declines 0.12%, which for a $300,000 home, with a 20% down payment, equates to a savings of $6,400 over the life of a 30-year loan.

“We are in an era of historically low mortgage rates, reaching levels not seen in decades. Coupled with four years of home value declines, homes are more affordable than we’ve seen for years. But the irony here is that so many Americans can’t qualify for these low rates, or can’t qualify for a mortgage at all,” said Zillow chief economist Dr. Stan Humphries. “Four years ago, in the era of easy-to-get subprime loans, many borrowers with low scores did buy homes, which in turn helped contribute to a housing bubble. Today’s tighter credit is a predictable response by banks after the foreclosure crisis, but also keeps a cap on housing demand, which is important for the greater housing market recovery.”

For more information, visit www.zillow.com.

Want instant access to great articles like this for your blog or newsletter? Check out our 30-day FREE trial of REsource Licensed Real Estate Content Solutions. Need easy stay-in-touch e-Marketing solutions too? Try Pop-a-Note for 99 cents!
Join RISMedia on Twitter and Facebook to connect with us and share your thoughts on this and other topics.




Copyright© 2014 RISMedia, The Leader in Real Estate Information Systems and Real Estate News. All Rights Reserved. This material may not be republished without permission from RISMedia.

Content on this website is copyrighted and may not be redistributed without express written permission from RISMedia. Access to RISMedia archives and thousands of articles like this, as well as consumer real estate videos, are available through RISMedia's REsource Licensed Content Solutions. Offering the industry’s most comprehensive and affordable content packages. Click here to learn more! http://resource.rismedia.com

Our Latest News >>