Entering into the housing market can seem like the equivalent of scaling El Capitan at Yosemite, but in reality, buying a new home shouldn’t be so daunting. As a matter of fact, many of the things that are going through your mind as you wrestle with the decision to purchase can be debunked in a matter of minutes. With that said, here are 4 common myths holding new home buyers back BUSTED!
1. You Need a 20% Down Payment
If you’ve done any research from any of the major lending institutions, you’ve likely discovered that you are required to have a 20% down payment for your mortgage. In reality, however, there are certain lenders and mortgages require as little as 5% down, and some government-based mortgage instruments require no down payment whatsoever.
Keep in mind that many mortgages require a mortgage insurance premium you pay which will protect the lender in the event you default on your loan. In many cases, that insurance (known as MIP), goes away once you’ve reached 20% equity within your mortgage. As a result, many lenders advertise that borrowers need 20% down when actual down payments can be far less.
In the end, you need to know that there are far more mortgage options out there that can accommodate your specific needs and financial situation.
2. You Need Perfect Credit
2008 basically blew this myth out of the water, and while standards have certainly been raised for borrower requirements, perfect credit is certainly not a requirement to buy a home.
As we’ve already mentioned, there are mortgage solutions for less-than-perfect credit and many ways to get around this hurdle. Credit alone doesn’t make or break you when it comes to getting pre-qualified for a mortgage, but it’s certainly a factor to keep in mind.
While credit has its place in the mortgage application process, many other factors such as income, existing assets, bills and payments, and personal savings play a huge role in your mortgage application. Basically, there’s still a mortgage solution out there for you even if your credit doesn’t set the world on fire.
3. Renting is Cheaper
Depending on where you live, what neighborhood you rent in, and where you’d like to buy, renting can actually cost you significantly more. Think of rentals like any consumable good: someone buys it for a price and adds a margin to their costs based on market demand.
While renting holds you virtually blameless in most instances such as maintenance, paying rent is the equivalent of paying a speeding ticket: it costs a lot, and you don’t get anything in return. Owning a home and paying a mortgage gives you both equity in a home and a tangible physical asset.
The equity you put in your home over time can be something you can leverage as an asset for a future investment and will ultimately pay dividends for your personal finance.
4. Getting a Mortgage Takes a Long Time
Depending on where you go for your mortgage this can hold true, but in today’s digital age, getting a mortgage shouldn’t cost you precious time. As a matter of fact, the team at Tidewater Mortgage Services can get you pre-qualified the same day you apply which can drastically decrease the time you spend getting a mortgage and give you more time to plan your new life in a new home.
The most important thing to keep in mind is that getting started early will save you a lot of hassle and heartache down the road. Give us a call today to learn more about owning your new home!
