Americans have critical misconceptions about mortgage requirements

Image result for Americans have critical misconceptions about mortgage requirementsCurrent economicOpens a New Window. conditions might indicate it is a good time to get into the housing market, but many potential homeowners appear to have some serious misconceptions about what it takesOpens a New Window. to do so.

Fannie Mae conducted a nationwide study among 3,000 respondents to track trends among consumers’ understanding of mortgage qualification requirements, and found that the majority of people think it is harder to qualify for a mortgage than it really is.

According to the findings, people overestimate the minimum credit score necessary to qualify for a mortgage. While the actual minimum FICO score is about 580 – which only 11 percent of respondents correctly identified – people thought it was 650. More than four-in-ten people did not know what their own credit score was.

People also overestimated the minimum down payment to qualify for a mortgage, which is about 3 percent. Most people said 10 percent.

Further, Americans are generally unfamiliar with low down payment programs – only 23 percent of people knew about the option.

Sixty percent of people, overall, thought getting a mortgage would be easy. More current homeowners (78 percent) were confident when compared with renters (33 percent).

The survey found, however, that even those who should be more knowledgeable about mortgage requirements – including current homeowners – are not. For example, while 9 percent of renters identified the correct credit score range needed to qualify for a mortgage, only 12 percent of owners were able to do so.

The top reasons people expect to have difficulty getting a mortgage are insufficient income to afford monthly payments, too much debt and insufficient credit score or credit history.

“For some Americans who would like to own a home, they could qualify for a mortgage but may assume homeownership is not a possibility,” researchers concluded.

Meanwhile, conditions appear to be ripe for homebuyers. Mortgage application volume increased 1.5 percent for the week ending May 31 – after falling the week prior, according to the Mortgage Bankers Association’s survey. Meanwhile, mortgage rates recently fell to their lowest level since the first week of 2018 amid rising concerns over trade tensions.

Digital Risk co-founder Jeff Taylor told FOX Business on Monday that for those looking to get into the housing market, “this is literally the perfect time.”

Meanwhile, many expect the Federal Reserve may cut interest rates this year, which could further benefit potential homebuyers.


Mortgage lending in ‘neutral gear’ as buyers’ incomes are squeezed

There has been a slowdown in the housing market

There has been a slowdown in the housing market in recent months

Mortgage lending has slipped in to “neutral gear” as the housing market slows due to a squeeze on consumers’ finances.

The Council of Mortgage Lenders said that gross mortgage lending was £21.4bn in March, 19pc higher than the previous month. But this sum was also 19pc lower than the amount lent in March last year.

This fall was in line with expectations, and was artificially created by a surge last March of buyers looking to purchase buy-to-let properties before stamp duty was hiked by 3pc.

The CML said that there had been a shift away from home movers and buy-to-let landlords, and towards first-time buyers and those remortgaging. CML’s senior economist Mohammad Jamei described lending as being “in neutral gear”.

He added: “We expect this profile to continue over the short term, as low mortgage rates encourage existing borrowers to remortgage and Government schemes help first-time buyers. We do not expect any marked effect from the general election.”

Howard Archer at IHS Markit said that the data “do little to change our suspicion that the housing market is being affected by the increasing squeeze on consumers and their concerns over the outlook”.

“We believe markedly weakening consumer fundamentals, likely mounting caution over making major spending decisions, and elevated house price-to-earnings ratios will weigh down on housing market activity and house prices over the coming months. However, a shortage of supply is putting a floor under prices,” he said.

He added that the election would do little to “materially affect” the housing market, which has been “stuttering” for some time.

  1. [“Source-ndtv”]

earnings Tax blessings On home mortgage: 10 rules you can now not Be privy to

Taking a loan to shop for a house comes with many tax benefits. many of us know that deductions of as much as Rs 2 lakh in interest issue of EMI and Rs 1.five lakh in major are allowed underneath earningstax regulations. but there are other critical tax policies a borrower need to be aware about.
here is a 10-point cheat-sheet:
in case you sell your private home before five years, the whole deduction claimed underneath segment80C in the direction of the important repayment is reversed and is brought to your income within theyear in which you promote the assets.but, the deductions claimed against the hobby portion are notreversed.if you have taken a credit score protection insurance to take care of mortgage payments in case of any unexpected incident, you may claim deduction against the top rate paid beneath segment80C.on this yr‘s price range, Finance Minister Arun Jaitley introduced a further deduction of Rs 50,000toward hobby price for first time domestic consumers. the additional deduction is to be had for homeloans of as much as Rs 35 lakh, supplied the property value does not exceed Rs 50 lakh.You cannotdeclare the primary repayment made at some stage in the pre-creation duration. you may most effective claim the interest portion for the pre-production length, handiest after the of completion of the construction of the property. you could declare it in 5 identical instalments from the yr wherein the construction of the property is entire. however, the hobby deduction (for each pre-creation and put upconstruction periods) claimed at some stage in the 12 months can not exceed Rs 2 lakh in a year.If the construction of the property isn’t always completed inside 5 years from date on which the mortgage wastaken, then the interest benefit of Rs 2 lakh reduces to just Rs 30,000. until this finances yr, the tenurerestriction for the of completion of the development changed into 3 years; the finance minister raised it tofive years, to offer a few remedy to the home consumers as assets delays are considerable theseyears.if you have not on time charge against your own home mortgage EMI, you could nonethelessclaim the deduction as the tax rule lets in someone to say deduction on an accrual foundation. but, in case your lender costs you a penal hobby for overdue fee, you cannot claim it as couldalso claim deduction underneath section 80C for the stamp obligation and registration costs paid.however, they can best be claimed within the yr wherein they’re paid.In case of a 2nd house, the wholefee in the direction of hobby may be claimed as deduction.In case of a joint domestic mortgage, every of the co-debtors can one after the other claim deduction against the most important and hobbycompensation made in the share wherein they may be sharing the EMI, subject to the most restrict.assume, you have availed a domestic mortgage with your wife as a co-borrower and are sharing the EMIin the ratio of 50:50, both of you may claim as much as Rs three lakh (Rs 1.five lakh every) for principalrepayment and Rs four lakh (Rs 2 lakh each) for hobby compensation.