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Between debt, credit issues and seemingly prohibitive closing costs, you might think home ownership is financially impossible for you. Unfortunately, there are some myths that stop people from going after their dream of owning a home.
Fortunately, we can debunk some of the more common myths that might be keeping you from pursuing home ownership.
Truth: Changes to lending policies are allowing additional flexibility to help mortgage applicants qualify for a home – even if you’re carrying student loan debt.
Truth: It’s a common misconception that you have to put 20 percent down on your mortgage. With more than 20 percent down, you don’t need to add mortgage insurance to your monthly payment. And a larger down payment reduces your monthly payments. But there are programs available that allow for down payments as low as 3 percent.
Truth: Closing costs – the fees charged when you take out a home loan – vary greatly, and they average between 2 and 5 percent of the home’s purchase price. On a $200,000 home, that’s roughly $4,000 to $10,000.
But don’t let the numbers scare you.
Truth: A mortgage does not necessarily cost more than paying rent. Interest rates are historically low, making mortgages more affordable, and a shortage of apartments nationwide is pushing rental costs higher.
Our loan payment calculator can help you figure out how much your loan payment might be. And this calculator can help you figure out if it makes more financial sense to rent or buy.
Truth: If your credit history is preventing you from qualifying for a mortgage now, remember, it is not a permanent obstacle.
Two big ways to improve your credit are paying your bills on time and paying down debt. Set up automatic payments to make sure your bills are paid by their due dates. To help pay down debt, pay more than the minimum balance on higher interest debts, like credit cards. Once you pay off one debt, put the money you had been spending on that bill toward other debts to pay those down even faster.
Here's the real truth: If you’re even thinking about buying a home, the first step you should take is to meet with a mortgage lender! They’ll talk about your goals and can answer questions like how much home you can afford and what your closing costs might be. Give us a call to get started!