As a first-time homebuyer, you may be concerned about the mortgage process. There is an overwhelming amount of information online regarding mortgages. It can be difficult to gather accurate information on one of the largest purchases of your life. To assist you, we’ve debunked a few of the first-time homebuyer myths.
MYTH: You must make a 20% down payment.
TRUTH: Many first-time homebuyers believe a 20% down payment is necessary to obtain a mortgage. However, many loan programs don’t require a 20% down payment. In fact, studies show an average of only 37% of first-time homebuyers put down 20% or more on their home.
MYTH: I won‘t qualify for a mortgage.
TRUTH: Many first-time homebuyers are unaware of the variety of loan programs that are available. Not all loan programs are created equal and several allow for alternative credit and higher debt ratios (your income versus your expenses). Meet with a mortgage consultant so you can understand what mortgage program may be right for you.
MYTH: I don’t need to be pre-approved for a mortgage.
TRUTH: Now, more than ever, pre-approvals are important. Not only do they ensure you are looking at homes within your budget, but they also communicate to the selling agent you are a serious buyer. With the competitive market, you need every advantage you can get. HUNT Mortgage’s Pre-Purchase Commitment can help you compete with cash offers.
MYTH: Look at homes at the top of your budget.
TRUTH: New bills like water, sewer, lawn care, property taxes, homeowners insurance, and maintenance are something you should budget for when evaluating potential homes. Don’t max out your entire budget on just your home mortgage payment! A good rule of thumb is to make sure you don’t spend over 28% of your gross monthly income on housing expenses.