Millions of Americans may feel like rising home prices prevent them from affording a home, but what if it’s really their lack of knowing how to buy a home?
According to credit scoring company FICO, 59% of Americans said in a survey shared with USA TODAY they don’t completely understand the steps involved in buying a home, with that figure rising to 64% among first-time homebuyers
Even among prospective homebuyers actively planning to make a purchase, half said they don’t fully understand the process. About 1 in 5 Americans, including 1 in 4 prospective homebuyers, also underestimate how significantly credit score affects mortgage rates, believing it has minor or no impact, or they say they aren’t sure. Roadblocks to home buying don’t all rest with the economy.
Many home buyers have more control than they may think. “Consumers who are looking to buy homes in the next year are facing real headwinds, primarily citing current interest rates and home prices, but they are not the only challenge,” said Jenelle Dito, vice president of FICO’s consumer empowerment programs and partnerships, in an email. “A surprising number of potential buyers face knowledge gaps around the homebuying process.” What do potential homebuyers need to know? One of the first things buyers should know is what their credit score is and then, devise a plan to improve it, financial experts said. Although 85% of Americans view credit score management as a wealth-building strategy, not just a borrowing tool, about a quarter of them don’t know their FICO score, FICO’s survey showed.