Oftentimes, the home buying process can be stressful, especially for first-time home buyers. Becoming approved, finding and bidding on a home, and the closing process can be very overwhelming. There are myths floating around that can make the home buying process even more stressful. Read more about home buying myths to avoid these common mistakes.
Myth 1: A 30 year mortgage is the best option.
Most first time home buyers choose the 30-year mortgage option and do not even consider a 15-year mortgage. Though the loans are similarly structured, it all comes down to what you can afford. A 15 year mortgage will ultimately mean higher payments, but you will pay less interest over the course of the loan. Make sure to have your banker give you the payment options for both a 15 and 30 year loan so you can determine which payment is best for your budget.
Myth 2: All home loans require a 20% down payment.
Though putting down 20% of the purchase price is a good investment in the beginning, it is not necessary. Current FHA regulations require 3.5% down for first-time home buyers. The average down payment is 13.5%. Check with your lender to determine how much you are required to put down on your home purchase.
Myth 3: The seller will always pay closing costs.
There are some instances where you will be able to negotiate closing costs with the seller. Sometimes the seller will pay a portion of your closing costs, or even all your closing costs. Some states require sellers to pay a portion of the closing costs. Check with your lender to see if the seller is required to pay, and what percentage they’ll be paying.
Myth 4: A real estate agent is not required.
Many home buyers prefer trying to buy a home on their own. Though there are a number of websites available to search available homes, a real estate agent will have access to properties that are not listed on public websites. Unless you are an experienced negotiator, your real estate agent will be able to better negotiate the price of the home, which is very beneficial when buying a home for the first time. Real estate agents are paid commission from the proceeds, so you will don’t pay out of pocket to utilize the expertise of a local agent.
Myth 5: A perfect credit score is necessary to purchase a home.
Perfect credit scores are exceedingly rare. Even though a credit score above 700 is ideal for better interest rates, it is not required. There are other factors that play into the interest rate you will be given, including credit history, debt to income ratio, and savings. If you are considering an FHA loan, regulations only require that you have a minimum credit score of 580. Even if you do have a score below 580, this does not necessarily disqualify you from receiving an FHA loan.
It is also possible to get a loan even after filing bankruptcy. Both Chapter 13 and Chapter 7 bankruptcy allows debtors to purchase a home after a year of successful payments and trustee approval. The best way to find out if you can get approved is by becoming pre-qualified through your lender. Make sure to do your research before taking the first interest rate offered.
If you’re looking to buy a home in San Marcos, Texas or the surrounding areas, be sure to contact The Damron Group today to discuss your needs! We’d love to help you find your dream home, and can help you get the best price possible.
