The requirements for buying a house and getting a mortgage have changed a lot in the past years. While there are still lots of confusing information and resources online, the reality is these changes have allowed many hopeful buyers to own their dream home. If you are thinking of taking the leap, it pays to be aware of the misconceptions that can prevent you from buying a house.
Mortgage lenders in Fresno debunk the myths on home buying and home affordability:
You need to have an excellent credit score.
While a high credit score helps, a low score won’t necessarily keep you from borrowing a mortgage. There also loan programs today that enable you to buy a home with a less than stellar score, like FHA and VA loans. Just keep in mind that there are advantages to buying with a high score, as this lets you enjoy lower rates, which means paying less interest over the life of the mortgage.
You need to make a down payment of 20%.
This was true at some point, but this standard has become unattainable for many people. Lenders now offer loan programs that allow you to buy a home with a down payment between 3% and 5% of the purchase price. It all comes down to finding the right loan product. Do take note, however, that paying a down payment less than 20% will require you to pay private mortgage insurance (PMI). This will then eventually be removed from your payment once you hit the 20% benchmark.
The figure on your preapproval should be your budget.
Getting a preapproval is a wise move, but the figure listed on the document is the maximum amount of money the lender willing to let you borrow. It is best to buy a house below that amount, so you’ll have money for other expenses and avoid being house poor. You may want to use a mortgage calculator to find out how much your monthly payment will be for a certain home loan and see if that amount comfortably fits your budget.
Buying a home doesn’t have to torture you financially. By doing your homework, being realistic, and finding a reliable lender, you can buy your home with less stress and move through the process of paying it without major financial hurdles.