Top myths about buying home
Buying a new house is a process that is filled with a myriad of emotions like excitement, stress, and nervousness. Whether you are a first-time homebuyer or have been around the block a few times, you always feel unsure because of the myriad of myths about buying home. Being able to debunk these myths will help you make the right decision and help you navigate through the process of buying a home smoothly.
Some of the common myths about buying a home are:
A down payment of 20% is a must
Though 20% is deemed to be a magic number, it is not a requirement. If you have a good credit score, you may get mortgage loans that will only require you to make a downpayment of 3-5%. You just need to remember that the more money you put down for the down payment, the lower are your mortgage payments. Which in turn means huge savings in interest over the period of your loan.
An amazing credit score is a must
Lenders don't just look at your credit score to determine whether you are eligible for the home loan or not. They take into account other factors like work history, income history, property type, and even the debt-to-asset ratio. If you have a steady source of income, it surely works in your favor. But it is always a good idea to improve your credit score as it impacts the loan amount and the rate of interest.
With student loans, you aren't eligible for a mortgage
If you have student loans, it can surely make it difficult to save for the down payment but in no way it disqualifies you to get the mortgage. The amount of the debt plays a major role here and also how the debt relates to your income and the credit score. The mortgage lenders take into consideration the debt-to-income ratio to calculate how much you spend in comparison to your earnings. Therefore, it will not be wrong to say that the less debt you have the better it is.
All banks and lenders will offer the same deal
When looking to buy a house, a house is not the only thing you should be shopping around for. You should also shop around for the mortgage. It surely pays to shop around from four or five lenders. Undoubtedly, it is a time taking process, but getting even a slightly lower rate of interest can help you save thousands of dollars over the years.
First find a house and then apply for the loan
This is one of the most common myths about buying a home. Getting pre-approved for the mortgage should be the first step. If you are serious about buying a home then it is highly recommended to get the pre-approved mortgage before you set out to shop for the house. In most cases, if you wait to get the loan approved while trying to make an offer, most probably you will lose on the preferred property. Also, it helps in narrowing down your search as it helps you to determine your price range.
Now that you have dispelled the common home buying myths, take a step towards finding and owning your dream home.
For first-time home buying, connect with Escape the Rent!