The NWM Blog
Written by Northwest Mortgage
Published on Fri, Jul 24, 2020, Last Updated on Fri, Jul 24, 2020
Do you know what prevents you from buying a home? It’s these myths that have been circulating that aren’t true. There’s no truth to these myths. However, first-time homebuyers are readily believing them and putting their plan to buy a home on the backburner.
We’re here to bust these home-buying myths wide open! There’s no place for myths in our world. Fingers crossed you’ll be one step closer to becoming a homeowner after we’ve bested these myths.
Myth #1: Having a 20% Down Payment
You don’t need to have a 20% down payment to buy a home. You’ll find a loan program designed for first-time buyers like yourself who don’t have the means to drop cash on a 20% down payment.
For instance, Federal Housing Authority (FHA) loan requires you to make a 3.5% down payment, which grows over time, whereas conventional loans require you to make a down payment between 3% to 5%.
If you want to put down a big down payment, you can, but you don’t have to!
Myth #2: Cheaper to Rent a Home than Buy a Home
We’ll be honest with you here. If you plan to stay in the area for a few months and then move on, it’s better to rent. If you plan to stay in the area for more than one year, buy a home. Our reason: Mortgage payments on a fixed-rate are stable while rent payments can increase each year. If you think you’ll save money by renting a home, it is very unlikely that you will. If you buy a home, its value will increase over time. When it’s time to sell it, you’ll get a good return for your money. On the other hand, if you leave an apartment, you get nothing back for the money you’ve spent.
Myth #3: You Need to Pay Your Student Loans First
Given, the burden of paying student loans is a lot, but having them doesn’t disqualify you from buying a home. There are several plans in place for people who are still paying off their student loans and are wanting to buy a home.
If your employer or parents are paying your student loans, the debt will be subtracted from your debt-to-income (DTI) ratio. You can even consider applying for an income-driven repayment plan. Moreover, student loan debt can improve your DTI.
Improved DTI means you can qualify for a better interest rate or loan program. What about all the debt of having a loan will create? Your debt will increase, but don’t forget about equity. Over time, your home’s equity will increase, and you can use that to work on paying off your student loan or other high-interest debts.
Myth #4: The Perfect Credit Score
You don’t need a perfect credit score to buy a home. If your credit score is poor, you should work on improving it to increase your chances of buying a home, particularly with a lower interest rate. You can buy a home with an imperfect credit score by applying for one of the many home loan programs out there. If you have a very poor credit score, work on improving it, and then if you think it’s just about perfect, consult with a home mortgage lender to discuss your options to buy a home.
Myth #5: Every Lender Is the Same
There are good and bad people in every sector, but generalizing every lender based on bad experiences with one will only take you further away from your goal of buying a home. As a home mortgage company, we take the time to learn more about you, and we consider your financial needs and objectives. We’re here to help you get where you want to go.
Northwest Mortgage has smashed these myths into the ground. We want you to become a homeowner, so don’t let these myths stop you from becoming one! Call us if you have any questions or would like to start the home improvement loan process today! We’re happy to bust more myths.