Mortgage Myths Debunked
Entering the housing market as a homebuyer can be intimidating. You tend to hear rumors about how "difficult" or "expensive," it is and it can start to scare people away from investing in a home.
Listen closely…Do. Not. Fall. For. The. Trap!
As your mortgage experts in home loans, we have all the answers and resources to make your home purchase a great experience.
Find out the truth about buying your first or second home below. For personalized answers or advice regarding your current or future mortgage, contact us!
Myth: You won't qualify for a home loan if you have student loans
This myth is just silly! Do you student debt? So do most borrowers! Student debt and credit card debt are different "in the eyes of lenders." So even if you have substantial student debt, buying your first home is still very much possible.
Myth: Avoid adjustable-rate mortgages like the plague
The 2008 housing crisis is still fresh on many buyer's minds, and this may make you wary of adjustable-rate mortgages (ARMs). But you shouldn't be! The bust was more of an issue of too-lax qualifying standards and less about the loan program itself.
ARM loans are an attractive option because of the low fixed interest rate it offers for the first few years. An ARM is a great option if you plan on refinancing or selling your home within 10 years. In fact, it could potentially save you thousands.
Myth: Shopping around for lenders will hurt your credit score
In some situations, multiple inquiries on your credit can lower your score. However, not all inquiries are created equal. Credit scoring companies, such as FICO, allow for customers to shop rates by counting all similar inquires within a 30-day period as only one inquiry. This means, you have 30 days to shop as many mortgage lenders as you’d like to find the best rate for your situation. Shopping around is encouraged as it could save the homebuyer thousands of dollars over the life of the loan.
Myth: You need 20% down payment
While a 20% down payment means you won't pay private mortgage insurance (PMI), you can buy a home with much less down. In fact, mortgage companies have loan programs that require as little as 3% down. Are you a veteran, currently enlisted, or a spouse of a member of armed forces? Then you may qualify for zero down! Brokerage companies can help educate you on the ins and outs of home loans.
20% down has its perks, such as no PMI and building equity a lot sooner. But that doesn't mean you MUST have 20% now to buy a home. When it comes to how much you can afford to pay every month, a FHA loan with 3% may be the most affordable option.
Myth: You won't qualify for any government home loan program
Government-sponsored loans from Fannie Mae and Freddie Mac offer numerous affordable lending options. Eligibility is much easier than other loan programs and could be based on the location of the home, your income, your military status, and even your first-time homebuyer status!
Curious as to which government loan you may qualify for? Contact our mortgage experts today for a hassle-free experience.
Myth: Your pre-approval can be used on ANY home
The property itself may impact how much you'll ultimately be able to borrow, especially when it comes to the final cost. So even if you were approved for a specific amount, your pre-approval might not be work in that particular property. This is most often the case when it comes to properties like condos and townhomes that may have higher final cost due to property tax rates and homeowner’s association fees.
Myth: You don't need a real estate agent
Searching home listings via the internet is easy but presenting you a list of homes for sale isn't the only thing a real estate agent does! They work as your advocate. They know the housing market well, know all the right questions to ask, negotiate on your behalf, and make sure that you are absolutely satisfied with your new home purchase.
Whether you're a first-time buyer or an experienced "flipper," real estate agents offer an invaluable service in the homebuying journey.
So to all our homebuyers, you might ask what is the truth about purchasing a home? It's a lot easier than you think! Contact us today to get educated and potentially matched with a home loan program that fits your budget and lifestyle. You can use our contact form located on our site or give us a call. We look forward to serving your mortgage needs!