Ghost stories, big foot, the loch ness monster. The mysteries of the unknown can leave us perplexed and questioning what’s truly real, and what’s not.
While certain myths are best left unknown, when it comes to the mortgage process, it’s important to know the truth between fact and fiction.
Here are 4 common mortgage myths to be aware of.
Mortgage Myth #1 – You Need a Perfect Credit Score
Do you have less than perfect credit? No problem! Certain loan programs accept FICO scores as low as 581, allowing you to buy a home without a perfect credit score.
If you’re credit score’s not quite there yet, don’t stress. There are plenty of ways to help improve your credit, including making payments on time, swiping responsibly, staying below your limit and more. Click here for more tips to build and maintain healthy credit.
Mortgage Myth #2 – You Need 20% Down
It’s common to think that you need 20% down to purchase a home. In reality, the down payment will depend on multiple factors, such as loan program type, credit score, home price/loan amount and more. Certain loan programs, such as VA loans, offer the benefit of low or no down payment options, and others like FHA loans offer as low as a 3.5% down payment. Plus, depending where you live, there may be local down payment assistance programs available to you based on your situation.
Mortgage Myth #3 – Renting is Cheaper than Buying
It’s not always true that renting is cheaper than buying a home. In fact, in many situations, you may be surprised to find a mortgage payment is actually cheaper than monthly rent.
It’s no secret that rents often change and are likely to increase over time. One of the many benefits of homeownership is being able to better control your budget by having a fixed mortgage payment each month, giving you the security of knowing exactly how much you’ll spend while avoiding surprise rent hikes from your landlord.
Mortgage Myth #4 – You Can’t Buy a Home with Debt
Got debt? You’re not alone. Many Americans struggle financially and while debt can be a burden to many, it doesn’t have to prevent you from buying a home.
DTI (Debt to Income) ratio is an important factor in determining your readiness to buy a home. When you apply for a mortgage, your lender will review your finances to determine your DTI by evaluating how much debt you have vs. how much pretax income you’re bringing in. This will help to decide whether you’re able to afford a home.
When it comes to the myths of the mortgage world, it’s wise to discuss what you’ve heard from what’s actually true with an expert lender before deciding your homebuying options.
To learn more about the mortgage process or to find a mortgage advisor in your area, contact us today. Discover how we partner with borrowers like you every day to evaluate their unique financial situations to make their dreams of homeownership come true.