Are you a real estate newbie? Before you do anything else, dispel yourself of the home buying myths that tend to swirl about. By knowing fact from fiction, you’ll be well on your way to landing in your first home.
So, without further adieu, here are some of the most common myths.
You can’t get a loan with a spotty credit history
You might think you need a stellar credit score in order to obtain a mortgage loan. While it’s true that the better your credit habits, the lower your interest rate, it’s still possible to get a loan if your credit history has a couple blemishes. And credit scores aren’t static. If you focus on improving your credit habits, your score will eventually go up and you’ll have a better chance of obtaining a loan and/or lowering your interest rates.
It doesn’t matter if I get prequalified for a mortgage loan
One of the most important things you can do before you start looking at houses is get prequalified for a loan. You’ll provide your paycheck stubs and recent tax return forms. The lender will also take a look at your credit history.
Once you’re prequalified, you’ll be in a strong position when making an offer on a house. If the seller receives multiple offers, you’ll have a better chance at having yours win the offer if the seller knows you have a solid funding source.
It costs less to rent
You might think you can’t afford a house and you’ll be stuck renting forever. But if you sit down and calculate the costs, you might realize you can afford it after all. One of the pros of a fixed-rate mortgage is your monthly payment and interest rate will stay constant throughout the life of the loan. When you’re renting, you never know when your landlord is going to raise the rent.
Plus, you’ll likely build equity when you buy a home. As the value of your home increases, you can subtract the amount you paid for the house and the difference is the value that has built up.
I need a big down payment
Many renters are under the false impression they need a 20 percent down payment in order to buy. But many people don’t know that’s often not the case. There are many first-time homebuyer programs in which the down payment is less than 20 percent.
If you qualify for a loan under the Federal Housing Administration’s program, you can get a low down payment, and your fees and interest rate could be lower than a conventional loan. Your lender can help determine if you qualify for the loan.
One thing that doesn’t fall among the first time home buying myths is that now’s a great time to take advantage of low interest rates. The lower your interest rate, the lower your monthly payment and the more money you’ll have to buy furniture for your new house.
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