Buying a home right now can feel overwhelming and crazy with all of the competition in the market. And if you are a first-time home buyer it can seem all the more daunting and maybe like you are fighting an impossible battle.
Many buyers turn to research on home buying, which is a great thing, but it can also mean that there are some well-intended bits of information that just aren’t incredibly helpful. It is good to know what information is good and what might be better left ignored.
Here are three big homebuying misnomers that you should not let get you down about purchasing a home in 2022.
In order to qualify for a mortgage, you must make a 20% down payment
Using the number of 20% is the most standard, common, and traditional form of the down payment for the majority of mortgage loans. This has led some people to believe that you will not be able to obtain a mortgage unless you make at least a 20% down payment.
The truth is there are many mortgage products out there and lenders that will accept down payments below 20%. Some lenders will even agree to as low as a 5% down payment, but it does mean that the applicant will need to carry private mortgage insurance. This can be a couple of hundred dollars extra per month in your mortgage payment, but this payment can be dropped once the loan balance hits a certain amount.
It is a very smart idea to go seek out a mortgage broker that can do mortgage shopping for you and find more than one mortgage option that could be in your best interest.
You HAVE to buy right now because it is better than renting
Not every single American across the country would do better to purchase a home right now, but there are many that could build their wealth and benefit more greatly from the purchase of a home and building equity.
When you are renting a home, you may not be responsible for the cost of the upkeep for the home but you are essentially paying someone else’s mortgage payment while they benefit from it. When you are the homeowner the money you pay into the mortgage is beneficial to you, the loan on the home goes down over time. Eventually, if you stay in the home long enough you will completely own it outright only needing to make payments for property taxes and upkeep.
In purchasing a home, however, you need to keep in mind those extra expenses can add up as well as any emergency that could come along. It is always good to make sure you are purchasing well within your financial means and have the ability to set aside rainy days and maintenance funds.
And in some scenarios, it could make sense to continue renting for now while putting aside some funds to ensure that you are ready for all of the costs that homeownership entails.
You only need to worry about your credit score when applying for a mortgage
While a credit score does play a big role in determining if you will be offered a mortgage and what interest rate will be offered, there are many other factors that go into deciding your credibility and qualification for a mortgage.
The higher credit score you have the more likely it is to obtain a quicker approval and a competitive interest rate. But there are other factors that go into determining your acceptance for a mortgage, such as your debt-to-income ratio. As well as your overall income and ability to pay back the loan while still having enough money to make other living expenses meet.
You want to make sure that you do not have other extensive debts that are taking a large amount of your income in addition to having a credible credit score.
When it comes down to purchasing a home in 2022, you should hire the help of an expert local real estate agent that can help to answer any questions you have and give some advice on how to tackle any possible hurdles of becoming a homeowner right now. As well as help you to find other real estate professionals for advice in areas such as mortgages and real estate law.
For more information on purchasing a home in St. George, please contact us at any time.
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