You don’t think you’re ready to purchase a home yet? You are emotionally prepared but not financially. Or are you hesitant to buy a home because of home-buying myths?
Let’s disprove the following myth.
Myth 1: I Have to Put Down 20%
Saving 20% of the price of a home in many places isn’t just a challenge; it’s a roadblock. And it’s not a must-do. The median down payment for first-time buyers is 7%.
Myth 2: My Low Credit Score Means I Can’t Buy a Home
So, your credit could use a tune-up. That doesn’t mean you have to forgo your home-buying dreams. Here are some options for those with a less-than-stellar credit score.
- FHA loan
- A higher down payment
- A co-signer
- Check your credit report
Myth 3: I Can’t Afford the Agent’s Commission
Here’s one you can immediately mark off your worry list. Typically, the commission is paid from the proceeds of the sale via the seller.
Myth 4: My Bank Will Give Me the Best Mortgage
There are a lot of positive things to say about working with your local bank, but assuming they’ll give you the best mortgage is a mistake.
Banks are only one type of home-loan lender. Others include credit unions and mortgage companies. Mortgage rates aren’t the same across the board, so contact several institutions to ensure you’re getting the best price.
Myth 5: I Was Pre-Approved. I Got The Loan!
You don’t get the loan until:
(a) The seller accepts your offer
(b) Your lender approves the loan (which you’ll need those tax docs for)
(c) You sign the loan papers
Between (a) and (c), the lender will have the home appraised to ensure its value is in line with the purchase price, check your credit again, and ask you for more documents than you ever knew existed.
Myth 6: The Interest Rate Is What Matters Most
A low-interest rate is important, but it’s not the only thing to consider. When shopping around for a loan, check the annual percentage rate (APR). It includes all loan costs, such as origination and processing fees that can vary widely from lender to lender, in addition to the interest rate.
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