Whether it’s your first time buying a home or you’re a seasoned homeowner, understanding the ins and outs of a mortgage can be confusing! Not to mention, there’s often a ton of information from multiple sources swirling around that may or may not be accurate. That’s where this article comes in! We’ll be debunking the most common mortgage myths so you can be sure you’re on the right path.
1) You Need To Put 20% Down.
If you’re just diving into the world of home buying, you may be surprised to find that it’s possible to buy a home with a minimal down payment. Some mortgage programs even offer 0% down, such as the VA Loan and USDA Loan Program. Even the FHA Loan requires just 3.5% down, which opens up the opportunity for you to purchase a home without having a huge nest egg.
2) You Must Have Perfect Credit.
There’s a lot of chatter about credit scores and obtaining that perfectly high score, which can seem intimidating if yours is less than stellar. Fortunately, some mortgage programs offer credit flexibility. Often, one of the biggest challenges is building credit from scratch – we all start with no credit and it takes time to grow it into an outstanding score. You may still be able to buy a home with average credit! You can visit C&F University or contact a loan officer to learn more about your credit and mortgage financing.
3) The Only Thing That Matters Is Your Income.
On the flip side, it’s important to understand that building credit means taking out lines of credit and/or applying for a credit card or two. However, when you obtain credit, be mindful of carrying a balance. You may think that your income is significant enough to buy a home, but if you happen to be carrying around quite a bit of debt (auto loans, credit cards, student loans, etc.), know that it will be factored into the overall mortgage amount that you qualify for. So, yes, income matters – but so does any outstanding debt.
4) There Are No Other Upfront Costs (Besides a Down Payment).
As mentioned above, numerous mortgage programs require little to no down payment when buying a home. This can be a huge help for buyers who may not have a ton of cash to put down. However, note that most mortgages come with closing costs – things such as attorney fees, inspection fees, etc. – equaling 2-5% of the home sale price. Sometimes, buyers can ask the sellers to cover the closing costs, or your lender may be able to offer a slightly higher rate with a lender credit to help lower those costs.
5) If You’re Denied Once, You Won’t Be Able to Buy a Home.
Getting pre-qualified for a mortgage for the first time can seem scary, but it doesn’t have to be. Even if it doesn’t work out the first time around and there are some things you need to work on, know that you can always try again in the future! In fact, this can be a great learning experience to help you make improvements to your finances and credit for a future home purchase. Your loan officer is your mortgage expert there to provide you the tools you need to become a homeowner.
Hopefully debunking these myths has encouraged you to pursue your journey toward homeownership! When you’re ready to begin the process, our team of local industry experts at C&F Mortgage will be here to help you every step of the way. Get in touch with us today to learn more!