You would be amazed at the amount of people, especially a younger generation, who still believe you cannot purchase a home without at least 20% down. This misconception often has people feeling as if you’ll NEVER be able to afford your own home, so they continue to rent, putting $750-$1,000 a month towards a 1-bedroom apartment, they’ll NEVER own. Yes, I get it, renting is often times inevitable, but let’s talk about a few myths you may THINK are true about buying your first home, & bust those myths for good. Trust me, you’ll be glad you were wrong.
“I Can’t Afford to put 20% Down on a Home”
Whew, thank goodness, because guess what… I can’t either. And neither can 90% of America, so you’re not alone! In fact, a majority of the loans completed this year were done with under 5% down! Purchasing a $150k home? That’s less than $7,500, or half a year’s rent. Perspective is weird, isn’t it? With the amount of different types of loans out there, the hardest part is trying to figure out which best fits your needs. Conventional loans allow borrowers to put 5%, 10%, 20%+ down on your home! FHA loans allow you to put 3.5% down on your home & there are even some lenders who will loan 100%, especially for first time home buyers!
Don’t let the myths, and the things you “think” you know about buying a home stop you from asking! Every loan is different, every financial situation is different, don’t compare your home owning journey to your friends, they aren’t the same!
“My Credit isn’t Good Enough to Buy a House”
Define good enough? Ya’ll... you don’t have to have an 800+ credit score to buy a house, let alone even a 700! At that rate almost everyone would be renting! FHA loans will allow you to borrow money at 3.5% down as long as your middle score (lenders will take the middle of your 3 credit scores) is over 580! Is your score under 580? No worries, you’ll just need a higher down payment.
Getting a pre-approval is the first step to owning your first home. But remember it’s exactly what it says, a “pre” approval, meaning you are eligible for a loan up to a specified amount as long as your financial credentials you provided are accurate! Lenders will need to pull your credit, and that’s okay! Did you know that pulling your credit for a home is the only time it won’t ding (lower) your credit score, every time it’s checked?
Closing Cost’s are Too Expensive
Well.. let’s answer the first question you may be wondering… what are closing cost? Think of your closing costs as what it takes to complete the sale of your home. The fees the lender, title company, county and state are requiring you to pay, all in one lump sum. Your closing costs may also include an appraisal fee, mortgage insurance as well as a few months of property taxes held in escrow. Most of these charges are the same across the board no matter who your lender is. Except for their fee. I have seen these charges range anywhere from $750-$7,500, but don’t sweat it, we may have an alternative.
Depending on the market, it’s not unheard of for sellers to pay the closing costs of the buyers. Now this may not always be true, but it’s worth asking. This will allow you more cash flow at the end of your journey for the necessities, you know, like furniture. This is where your realtor comes into play, knowing the best way to write your contract if you are wanting to ask for closing costs to be paid.
Have you been renting because you have to, or because you thought you needed $20k in the bank before you could buy a home? Are you renting because you have to or because you thought you needed a 700 credit score before you could qualify for a loan? Or are you renting because you thought you knew everything about buying a home, and now you're extremely glad you were wrong this whole time, and you can't wait to get pre approved for something you OWN!?
I would love to read your comments, questions & insights below!