We’re celebrating National Homeownership Month with a little game of Mortgage Mythbusters! So many fallacies about homebuying are floating around out there. Some of them prevent people from even trying to buy a home. Here are 3 common homebuying myths, busted.
Myth #1: You need a 20% down payment to buy a home.
Not always! Many first-time buyers can get a loan with only 3% down, and some loans require no cash down. On average, first-time buyers put down 10% of the home’s sales price.*
Myth #2: You need excellent credit to buy a home.
While each lender can set their own credit score requirements, the minimum FICO score for an FHA loan is 500, and for a conventional loan it’s generally 620. Your income and savings can sometimes act as a counterbalance for poor credit.
Myth #3: You need to find the right home before applying for a mortgage.
Your home search should always begin with finding out what you can afford and the type of financing options available to you. This will help ensure you are shopping at the right price point. A pre-approval lets you know how much money your lender will loan to you, which helps you set your homebuying budget. It also helps make you a more attractive buyer because it shows both real estate agents and sellers that you are serious about purchasing a new home and that you can obtain home financing.
Have questions about buying or refinancing this summer? We’d love to help. Please reach out!