Whether you’re a first-time homebuyer or you’re just not well-versed in the homebuying and financing process, you may have heard things like you need 20% down and you can’t qualify if you don’t have great credit. If these, or other such homebuying myths, have been holding you back, here’s a reality check on some of the common homebuying myths that shouldn’t stop you from buying home.
Note: Information provided here is not a replacement for professional advice from a qualified mortgage professional. For specific advice and details on what you may qualify for, you should contact a mortgage professional.
Myth #1: You Need a 20% Down Payment
Reality: While a 20% down payment will give you more favorable loan terms, you don’t need 20% to buy a house. You can get a loan for as low as 3% down (or 0% if you’re a veteran). There will be added costs on the loan, such as mortgage insurance, for down payments less than 20%, but it is absolutely possible to get a loan with less than 20% down. In fact, according to TheMortgageReports.com, the average down payment for first-time buyers is between 8% and 13%.
Myth #2: Your Credit Score Needs to be Perfect
Reality: The higher the credit score, the better the terms you can get on a mortgage, but there are options for those whose credit is not perfect. Loans are available for those with credit scores under 600, but there may be additional requirements, such as a higher down payment. To determine what credit score may be needed, you would need to talk with a lender.
Myth #3: You Should Wait Until Prices Come Down
Reality: Based on historical data and specific market conditions, including a housing shortage in Utah, not only are prices unlikely to come down, but experts believe prices will just continue to rise. According to the Utah Association of Realtors®, media sales prices in Salt Lake County are up 4.7% YTD compared to last year.
Myth #4: You Should Find a Home Before Applying for a Loan
Reality: Picture this … you go house hunting and find the PERFECT (and we mean perfect) home. Excited, you reach out to a lender, fill out an application, and get a loan approval that is not enough to cover this perfect home you found. That would be disappointing, right? To ensure you are shopping within your budget and to make sure your offer is as attractive as possible (a seller is more likely to go with a buyer who they already know can afford the home), get pre-approved first. A pre-qualification may also work, but a pre-approval is a stronger commitment from a lender that, based on certain conditions, you will be approved for the loan.
Myth #5: You Can’t Get a Loan if You’re Self-Employed
Reality: Self-employed individuals can still qualify for traditional mortgages, but in instances where that may not be an option, lenders have a wide range of loans, including for those with unusual income situations like the self-employed. Before writing off a home loan simply because you are self-employed, contact a lender to review your specific situation and see what options you may have. The Liberty Homes Preferred Lenders are a great place to start. All of them have years of experience qualifying buyers for a variety of loans.
Looking for your dream home? Liberty Homes has been building new homes in Utah for nearly 30 years. We take pride in our trade, crafting each home as if it were our own. Our quality, affordable homes are energy smart and thoughtfully personalized for your active Utah lifestyle. We currently have townhomes available in Salt Lake County, single-family homes in West Jordan (now open to all ages!), and single-family homes in Heber City. Contact us today to find your dream home.
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