You love your neighborhood and you have a steady job, but there’s one thing bothering you: You’re still renting. What you really want is to find a place where you can put down some roots. But you don’t have enough for a 20% down payment and your credit isn’t perfect, so how can you buy a home? Good news: The home you’ve had your eye on could be yours sooner than you think. Let’s dispel some common homebuying myths:
Myth: I need a near-perfect credit score.
Fact: Having a score in the very good or exceptional range is probably going to get you better loan terms, but it’s not required.
If your credit score is considered fair or good, you will still be able to borrow. You’ll likely have a slightly higher interest rate, but you could improve your score and refinance in the future.
Myth: A 20% down payment is mandatory.
Fact: Most buyers have a lower down payment. We can discuss which loan options are fit for you.
With a Federal Housing Administration (FHA) loan, you may need as little as a 3.5% down payment, depending on your credit standing. Veterans and military personnel can sometimes buy a home with no down payment using a VA loan.
Myth: I’m prequalified or preapproved — I can buy a home now.
Fact: Prequalification or preapproval gives you an estimate of how much you can borrow before you start house hunting.
You’ll get a Loan Estimate after applying for a mortgage that gives you a more accurate picture of the costs and terms.
Myth: Fixed-rate loans are always better than adjustable-rate loans.
Fact: It might seem that a fixed-rate mortgage can help you plan for the future by knowing your monthly costs.
But don’t automatically discount adjustable-rate mortgages (ARMs). Rates could fall, and ARMs are especially useful if you think you’ll be in the home for five years or less. Reach out to learn more.
What else do you want to know about home financing? Get in touch today if you have questions.
via Loan America