Mortgage Mythbusters for First-Time Homebuyers

First-time homebuyers can become discouraged by the comments they will hear about how difficult can be the home buying experience. Let’s look at some common myths that may come up anytime someone mentions they are buying their first home.

Myth #1 — You must have 20% down payment

This isn’t true. The 20% number occurs because below this level the lender will normally require Private Mortgage Insurance (PMI) to protect themselves. But is it a “must”? Nope. Some lenders will accept just a few percent down. Of course, you start with less equity but if you intend to live in the home for some time this won’t be an issue. If you are a veteran, in active service, or a military spouse you may be eligible for 0% down!

Buying a Home

Myth #2 — Student loans will disqualify you

This is not correct. Student loans are not considered the same as credit card debt when underwriters review mortgage applications. Talk to lenders, not your friends, about your student loan issues.

Myth #3 — Adjustable-rate mortgages should be avoided

You may hear to avoid ARMs like the plague. This is not necessarily true and may be a result of the 2008 market crash when so many ARMs were issued with very lax qualifications. An ARM can be an advantage because of its lower interest rates in the first few years. If you believe you will sell or refinance within perhaps 10 years don’t ignore ARMs.

Myth #4 — You won’t qualify for government loan assistance

This is simply not true. Government-sponsored loans such as Fannie Mae or Freddie Mac offer a range of mortgage assistance programs. Buyers can qualify based on income, where the home is located, military service, and other considerations. Don’t ignore them.

Myth #5 — Pre-approved loans can be used for any home

Unfortunately, this is not always the case. You should have a pretty firm idea of the home you want before getting pre-approval, because the final home cost may exceed your approved loan amount. This can be the case with townhomes or condos which have association taxes and fees attached to them. Research carefully and understand all the costs before you ask for pre-approval.

Myth #6 — You don’t need a real estate agent

This may be true but we think it’s a myth because it is not a good idea. A real estate agent not only shows homes but will be your advocate in the buying process. They have information on loan programs, can look for pitfalls in the seller’s offer or paperwork, and much more. They know the right questions to ask and will negotiate on your behalf. You can buy a home without using an agent, but we would not recommend it.

If you have any questions about AHL Hard Money Network’s mortgage programs, please give us a call at 813-516-5210.

*We do not issue approvals. We are a marketing and lead portal. You will be contacted directly by our private investors. They will call you directly to determine the value and equity in your home and to help you throughout the approval process. Each inquiry is on a case by case basis. Thank you.


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