Buying a home for the first time can be confusing and intimidating. More so if many of the things you believe turn out to be myths that only hinder you from starting your home search or making an offer on a home.
We're here to help you clear those misconceptions so you’ll have the right mindset and strategies on your path toward homeownership.
1. “I need a 20 percent down payment.”
Saving for a down payment isn't only a challenge for many renters and non-owners alike; it’s a roadblock that hinders them from entering the housing market. And many first-time home buyers believe they still need a 20% down payment before they can get approved for a mortgage. That may be true a few decades ago, but that’s no longer the case these days. The median down payment for first-time buyers has remained steady at 6 percent in the past several years. Times are changing, and through various government programs available, buyers are now allowed to put in as little as 3.5% to achieve their American dream of homeownership.
2. “I can't get a mortgage if I don’t have a perfect credit score!”
There are other factors that lenders take into consideration when deciding whether you'll be approved for a mortgage, including your employment history, debt-to-income (DTI) ratio, and the amount you can give as a down payment. Also, the required credit score depends on the type of loan you’re getting. Conventional loans have the strictest standards and require a score of at least 620. Meanwhile, FHA loans need a minimum credit score of 580. So if you have a lower credit score, don’t think that you’re already out of the game. There are measures you can take to improve it before applying for a mortgage.
3. “I'll skip hiring a real estate agent to save money.”
Using their expertise, negotiation skills, and comparables, realtors can help you get the lowest purchase price for your dream home. They can also help you understand complicated real estate contracts and guide you through things like home appraisals, inspections, and contingency clauses, among others.