Massachusetts Home Buyer Guide

Some potential Massachusetts home buyers may be sitting on the real estate sidelines because of misconceptions about what it takes to secure a home loan, according to a recent survey by Wells Fargo and Ipsos Public Affairs. 

The Wells Fargo second annual “How America Views Homeownership” survey shows that most consumers want to own a home, but their beliefs and expectations about what it takes to obtain financing demonstrate some consumer confusion and misinformation.

The survey found that 65 percent of respondents felt home ownership was a dream come true or an accomplishment to be proud of, and 72 percent believe now is a good time to buy; however, their perceptions about what it takes to buy a home, including perceived barriers, show opportunities for home buyer education.

The new data shows that some consumers continue to overestimate what they need to qualify for a home loan. Two-thirds believe they need a very good credit score to buy a home, with 45 percent thinking a “good credit score” is more than 780. A credit score of 680 or higher will, in most cases, be enough to secure a home loan.  

Consumers also overestimate the down payment funds needed to qualify for a home loan, with 36 percent thinking a 20 percent down payment is always required. There are several Massachusetts first-time home buyer loan programs that require far less than a 20 percent down payment.

Results also showed that when they’re ready to buy a home, consumers also want a lending experience that’s both convenient and personal, combining online tools with human guidance (73 percent).

The survey results also showed the following about potential home buyers.

• People who currently rent typically want to buy homes, with only one in 10 responding that they would prefer renting over owning a home.

• Interest in buying a home is also notable among a diverse population: Higher proportions of African-Americans (37 percent) and Hispanics (31 percent) say they’re considering buying a home in the next two years compared to the general population (17 percent). In fact, the percentage of African-Americans considering buying within two years rose 15 points over last year (from 22 percent to 37 percent).

• Despite a wide variety of loan down payment options, 21 percent of respondents in the general population and more than a quarter of African-American and Hispanic respondents identify lack of funds for a down payment as a barrier to home ownership.

• Fifty-eight percent of African-Americans and 55 percent of Hispanics report the belief that a 20 percent down payment is required. In reality, options may be available with down payments as low as 3 percent or 3.5 percent for different loan programs.