Low Credit Scores Blocking 1/3 of Americans from Homeownership
Nearly one-third of Americans are unlikely to qualify for a mortgage because their credit scores are too low, making homeownership out of reach for many, according to the online real estate marketplace Zillow.
The Seattle-based company analyzed more than 25,000 loan quotes and purchase requests on Zillow Mortgage Marketplace during the first half of September and found that borrowers with credit scores under 620 who were seeking a 30-year fixed, conventional loan were unlikely to receive even one loan quote, even if they offered a down payment of 15 to 25 percent.
Nearly one-third of Americans, or 29.3 percent, has a credit score this low, according to data provided by myFICO.com.
Not only are a third of Americans locked out of owning a home, but less than half qualify for the best rates. The lowest interest rates went to mortgage borrowers who were among the 47 percent of Americans with credit scores of 720 or above.
During the first half of September, borrowers with credit scores of 720 or above got an average low annual percent-age rate (APR) of 4.3 percent for conventional 30-year fixed mortgages.
Borrowers with mid-range credit scores between 620 and 719 received APRs between 4.73 and 4.44 percent, with the APR rising as the credit score dropped. Zillow says those with credit scores below 620 received too few loan quotes to even calculate the average low APR…
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