First-time home buyers often get their information second-hand from others who have already been in their shoes. Unfortunately, recycled information often gets passed along that is as much myth as it is factual.
When it comes to getting a mortgage, there is no room for error. Even a seasoned homeowner who has been paying off their first mortgage for years may find that many of the facts that applied to their first mortgage are no longer true, especially following the housing crash a few years back.
Before you start doing the paperwork with a mortgage company you don’t know, take some time to separate fact from fiction so that you get the terms you expect from your mortgage. Buying a house is too big of an investment not to have the facts going in.
Myth vs. Fact
- “It’s a Bad Market for Buying” – Buying a house is kind of like the decision to have kids; if you wait for the perfect time, it will never happen. The factors surrounding the house and your situation are what determine whether it’s a bad time to buy or not.
- “Zillow Home Value Estimates Are Accurate” – The reality is that while you can get a reasonable estimate based on the neighborhood and other data regarding the home, it isn’t as accurate as a valuation.
- “I Need 20% of the Overall Value as a Down Payment” – You can get mortgages for less, and even those that require no down payment. The fact to keep in mind is that the less you pay down, the more interest you will have to pay. To get this translated into numbers, use the A and N Mortgage company calculators to estimate your payments and see how much down payment you really need.
- “Mortgage Rates Are Too High” – Maybe, but they are also on the rise. Wait, and you can expect to pay more.
- “There Are No New Homes Being Built” – If you can’t find a new home being constructed in your area, talk to a realtor about the areas where builders are focused on new construction.
- “Homes Are Highly Overpriced in Today’s Market” – Some potential home buyers believe they can’t afford mortgage payments on their budget. The fact is that low-interest rates and home prices that have remained steady for the last few years have made buying a home affordable for most people in the middle-income range.
- “I Can’t Get a Mortgage with Poor Credit” – Mortgages aren’t a One-Size-Fits-All solution. Imperfect Credit Programs provide mortgages that help re-establish credit. They aren’t right for every person or situation, but they may be ideal for some.
- “No Credit Score Means No Negative Credit Report” – Just as too much debt can hurt you, not having any credit can do the same. If you have never needed to use credit before, you may need help proving your creditworthiness to a mortgage lender.
- “My Debt Ratio Is Based on the Amount of Money I Bring Home” – Actually, it is based on your gross income before deductions. Make sure the mortgage payment you get is one that really fits into your overall budget.
- “Paying Off a Previous Mortgage Early Will Improve Your Chances of Approval” – Mortgages are meant to be long-term loans. Paying off the balance early won’t help your chances of getting approved for a new mortgage – but it won’t hurt your chances, either.
- “Unsettled Debts Will Keep Me from Being Approved” – The fact is that – most of the time, unless the debt is excessive – you can probably get away with a few old collections as long as you have a decent credit score. Underwriters don’t usually worry about medical debts that have gone unpaid since most people will do what is necessary to get well.
- “Other Purchases Won’t Interfere with My Mortgage Application” – Many borrowers don’t realize that their credit will get pulled again prior to closing. Any other purchases you have made will be included, and they can go against the final decision.
The key to having a positive house-buying experience is to get the mortgage that is right for you and your circumstances. To learn more about your financing options or to get a free quote, call A and N Mortgage at 773-305-LOAN.