You are planning on buying your first home but are disheartened by myths? Home prices are currently on a rise and it is the perfect time to make up your mind and make a purchase. There is nothing stopping you from qualifying for a mortgage loan. All you need to do is press the right buttons and plan accordingly.
Research shows that 15% of people in America wish to purchase a home in the next few years but are apprehensive about their financial resources. There is another 10% who have the finances but for various other factors would wait a couple of years more. In short, there are prospective homeowners in America but they are tied down with myths about buying one.
First Time Home Buying, The Myths:
A perfect credit history is mandatory
Requirement of 20% down payment
Legal obligation of lenders to provide best possible rate on the loan
Renting is cheaper than owning
You must work with your current employer for at least 5 years to qualify for a loan.
First Time Home Buying, The Facts:
Although credit history is important, you can clarify a two-year bankruptcy with an explanation letter to the lender. If your credit history is poor, enroll for credit counseling service and in less than two years your finances will bounce back.
With several new mortgage plans in the market, borrowers are now getting loan options for as low as 3%-5% down payment. A good credit history could actually facilitate a zero down option. However, it is advisable that borrowers go for a thorough market study before selecting any option.
Each lender has its own rates, and these may vary according to their standards and the type of loan applied for. Since rates change on day-to-day basis, discuss rates daily with more than one lender.
While evaluating owning against renting, think of tax deductions. Buying a home involves mortgage interests, closing costs, and points etc that are tax deductible. Owning a home certainly results in larger tax refunds in comparison to paying rent.
Though job stability is a vital factor, the 5-year criterion is not rigid. A good credit, large down payment, continuous employment, and significant promotions can help compensate for frequent job changes.
Interest rates are currently going through a ‘low’ phase and investing now is a good move. Buying a home is no doubt a difficult task, and for that reason first-timers should conduct thorough research and ask relevant questions- the property, the structure, number of rooms, and every day necessities are primary aspects to be considered.
Check the degree of public safety of the area such as crime rate, proximity to medical, fire and law enforcement services. Public transportation, parking conveniences and recreational facilities are other important factors. Bear in mind the convenience of elders if they live with you. Also find out if you are eligible for property taxes if you are a senior citizen, and also utilities if any.
First Time Home Buying ~ Once you are serious about purchasing a home, there are a few steps you can adopt to make the purchase smooth.
Save – for down payments, closing costs, miscellaneous expenses.
Cleanup – bad credit and reports
Research – on financial management, loans, home buying
Lookout – for potential living areas, houses, and compare
Discuss – with well-known real estate agents and plan a clear-cut preliminary process
The internet offers accurate and comprehensive information in confidential manner on mortgage loans, and unlike older times it is much easier to get relevant information on home buying. Always remember that mortgage lenders are vying for your business. You don’t have to fear about not qualifying for a loan. Lack of knowledge and a bad credit situation is no hurdle to gaining a loan. The internet, in fact, has all the information you need to get you going on home buying.