Over-Estimating What it Takes

Although the majority of Americans favor homeownership, Fannie Mae’s latest National Housing Survey revealed many over-estimate the qualifications and what it takes to own a home. “Despite increased exposure to credit scores and online resources, consumer understanding about what it takes to qualify has not improved since our original study in 2015, potentially discouraging willing and qualified Americans from taking steps toward homeownership,” the GSE’s report stated. Fannie Mae said that a 2018 study, which included an online survey of more than 3,000 respondents, found that more consumers reported seeing their credit scores, but close to half cannot recall what it is. Also, consumers overestimate the necessary score and down payment needed to qualify for a home loan, remain unfamiliar with low down payment programs, and an overall lack of knowledge on qualification.

“While viewing one’s score is a good start, consumers need to understand what to do with that information,” Fannie Mae said. “Monitoring a score is not the same as understanding how the score impacts their financial situation.” Fannie Mae added that education should be timely, customized, convenient, simple, and delivered when a potential borrower is making a decision on whether to buy or sell. Optimizing information for mobile devices will play a large role in closing the gap, especially for younger borrowers. Some mobile apps already help consumers budget, invest, and manage debt. Residential finance tools could be integrated into more of these apps to provide step-by-step advice, the Survey indicated.

Source: DS News