When it comes to buying a home, there are a lot of misconceptions about the process, especially for first time home buyers. We’ve teamed up with president of CorTrust Mortgage Todd Hopkins to uncloak frequent myths surrounding the process of buying a home, obtaining a realistic mortgage, and understanding the steps in between.
Myth #1: You need 20% down to buy a home.
While it is true that putting 20 percent down on a house allows you to avoid paying for private mortgage insurance, it is not a must. There are varieties of down payment assistance programs available. A few require little, and in some cases, no down payment at all. “South Dakota Housing Development Authority and Grow South Dakota are a couple of popular programs” said Hopkins.
Myth #2: You need amazing credit.
Good credit never hurts, but some mortgage companies have lending products that can help you move beyond credit challenges. Don’t let credit problems hold you back from speaking with mortgage loan originators. Hopkins swears by communication, “I absolutely advise people to come in and ask questions.”
Myth #3: Your income is the only thing that determines how much you can borrow.
You might be surprised to know that your monthly or annual income isn’t the only factor used to determine how much you can borrow. Things like credit and job history are taken into consideration when determining your loan amount, which is catered to each individual person.
Myth #4: Contacting a mortgage lender should be your last step in the home buying process.
Contacting a mortgage lender should actually be one of the first things you do in the home buying process. In fact, it is advised to work with a mortgage lender before you even start browsing for homes, and for good reasons. First, you will have a better idea of the price range of homes you can afford. Second, you’ll avoid missing out on your dream home to someone who is already pre-approved. Hopkins attributes the majority of these myths to misconceptions of home buyers. “People have a perception that the process can be difficult and cumbersome. Allow banks to help from start to finish.”
Myth #5: I’m locked into my rate forever with no other options.
True, kind of.
Standard policy doesn’t allow buyers to re-lock in if rates change. However, there are options available. For example, if rates go up, you are completely protected from that increase. If rates go down, you have the option to refinance your loan at that time. Your mortgage lender will help you explore options to see if it makes sense to refinance, which is another reason it’s important to get in touch with a lender as soon as possible.
While these are just a few of the common myths that surround home buying, it’s important to get your facts straight. “Buying a home used to be harder than it is now. Many people are unsure of the home buying process, which is why we are here to help,” said Hopkins.
Meeting up with a mortgage lender will not only help you debunk real estate lore, but also put your home buying nerves at ease.
For more information, visit cortrustmortgage.com.