Credit fear curtailing loan applications – Wells Fargo
Sep 16, 2014, 6:51 AM | Updated: Mar 4, 2016, 5:47 am
Nearly two-thirds of Americans recently surveyed say they believed a stellar credit score was necessary to purchase a home, and more than 40 percent said they needed a down payment equal to or at least 20 percent of the purchase price to buy a home today, according to a new survey released by Wells Fargo.
However, the nation’s largest mortgage lender says many customers believe it’s much more difficult to get a mortgage than it really is.
Franklin Codel, Wells Fargo’s head of mortgage production, notes that the bank has lowered minimum credit scores for loans backed by the government in an effort to expand its eligible borrower pool.
“When we expanded FICO ranges, we saw not only an increase in applications but we also saw an increase in approval rates,” Codel said.
The lender acknowledges that mortgage credit has tightened since the financial crisis. But buyers’ fear of rejection by a bank are needlessly keeping some of them out of the housing market.
For example, in 2013, 19 percent of families said they did not apply for a consumer loan due to fear of rejection – which is more than the 16.4 percent rate of families who actually are turned down for credit, according to a recent Federal Reserve survey.
