3 in 10 American Consumers May Not Qualify for a Home Loan

3i1acm

While the American housing market is starting to improve, it still has not recovered from the housing bubble.

One of the reasons why the market is still struggling could be because many Americans are not able to qualify for a home loan.

A recent study found 30 percent of Americans would likely not qualify for a home loan.

For this study, analysts looked at data from 13 million mortgage quotes and 225,000 loan purchase requests.

They found applicants with a credit score below 620 were unlikely to receive any quotes for a mortgage loan, even if they were willing to make a sizable 20 percent down payment. Fico reports just under 30 percent of Americans fall into this category.

“Applicants with a credit score below 620 were

unlikely to receive quotes for a mortgage loan.”

Researchers also found applicants needed a credit score of 740 or higher to qualify for the very best loan interest rates. This threshold was only 720 in 2010.

Applicants with the strongest credit scores received an average 30-year fixed interest rate of 4.42 percent. In comparison, applicants with scores between 620 and 740 received interest rates between 4.47 to 5.09 percent.

Considering the size of a mortgage loan, this difference means hundreds, if not thousands, of extra costs for borrowers without the best score.

However, they are still in better shape than the 30 percent of Americans that likely can’t qualify for a loan at all. Use this study as motivation to maintain good credit habits, as it will make buying a home much easier and less expensive.

Source: southerndailypress.com.

Advertiser Disclosure

BadCredit.org is a free online resource that offers valuable content and comparison services to users. To keep this resource 100% free for users, we receive advertising compensation from the financial products listed on this page. Along with key review factors, this compensation may impact how and where products appear on the page (including, for example, the order in which they appear). BadCredit.org does not include listings for all financial products.

Our Editorial Review Policy

Our site is committed to publishing independent, accurate content guided by strict editorial guidelines. Before articles and reviews are published on our site, they undergo a thorough review process performed by a team of independent editors and subject-matter experts to ensure the content’s accuracy, timeliness, and impartiality. Our editorial team is separate and independent of our site’s advertisers, and the opinions they express on our site are their own. To read more about our team members and their editorial backgrounds, please visit our site’s About page.