Why Columbia SC Home Buyers Won’t Take the Leap

Many Columbia SC home buyers are giving up trying to get a mortgageHere we are, half way through the year, and Columbia SC home buyers are just not jumping on the idea of buying a home. The spring buying season was down 1.2 percent in May, and declines in borrowing to buy a home in the month of May are virtually unprecedented.

Sales are down year over year. April sales are down 6.8 percent from a year ago. Cash sales continue to account for a large percentage of purchases and financed purchases have fallen far below normal even though it's easier to get a mortgage today than it was during the mini-boon of a year ago.

Median FICO scores for successful conventional purchase loans have fallen from 761 to 755 over the past 12 months. Nothing to write home about but incremental progress nonetheless.

Despite the gradual relaxation of lending standards, many Columbia SC home buyers are simply giving up trying to get a mortgage. Fear they will not qualify for a mortgage has stopped half (50.7%)  of today's potential Columbia SC home buyers from pursuing the financing they need to buy a home, according to loanDepot's survey released last month.

The survey found plenty of pent up demand. One in three Americans (29%) say they'd like to buy a home in the next two years and 71 percent of those who want to buy a home in the next two years will need financing.

Yet 74% of those who want to buy a home but fear they won't qualify for a mortgage admit they haven't taken any steps to qualify. Only 27 percent have actually taken steps to see if they can get a loan.

So Why Are Columbia SC Home Buyers Giving Up?

The survey found that:

  • Potential buyers fear they won't qualify.  Half (53%) erroneously think it's harder to get a loan today compared to a year ago.
     
  • Many potential Columbia SC home buyers think they need a higher FICO score to get a loan than they actually do today. Half of all Americans don't know what minimum FICO score is required to qualify for most loans, while 18 percent think they need a minimum FICO score of 680 to 770+ to qualify. In reality, 33 percent of all closed loans in Feb 2014 had an average FICO score of less than 700 compared to 24 percent one year ago.
     
  • Many potential Columbia SC home buyers overestimate the impact that their debt to income ratio (DTI) has on their credit worthiness. Of those who want to buy but have given up, almost a third (34%) say their DTI is too high while 24 percent say it's lower than what is needed. By comparison, 15 percent of those who want to buy a home but are not concerned about qualifying for a loan say their debt is too high. In fact, industry reports show many mortgage lenders have relaxed their debt to income requirements.

The survey confirms uncertainty and confusion about qualifying for a loan are driving more young potential Columbia SC home buyers away from homeownership than any other age group. However, their uncertainties and fears may be much worse than reality.

Get all the news that affects Columbia SC area home buyers by clicking the Columbia SC Real Estate News link to your right under Columbia SC Real Estate Categories.

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