If you’re thinking of buying a home for the first time, you probably have many questions about the best way to find and finance your dream home. However, the home-buying process has been overtaken by a lot of misconceptions throughout the years. From home loan deposits to financing myths, any first-time home buyer will understandably feel a little overwhelmed with all the information out there.
To shed some light on it, here’s a compilation of some of the most common myths that every first-time home buyer should be aware of.
Myth #1: Having a perfect credit score is a must when buying a house
While having good credit is definitely a great advantage, there are actually other ways of financing your home, even if your credit score doesn’t look that great. There are home loans out there that buyers with lower credit scores can qualify for.
For one option, you can look up hard money lenders as an alternative to conventional loans. They look more into your equity instead of your credit score. Don’t be afraid to ask around and speak to a few local lenders or mortgage brokers when looking for options.
Myth #2: You can’t get a mortgage approved if you’re still paying off student loans
It’s completely acceptable to first pay off any existing debts before deciding to buy a home. However, being debt-free isn’t actually a requirement!
When applying for a mortgage, your debt-to-income ratio will be one of the things your lender will look into. It’s basically a way for them to gauge if you can keep up with paying your monthly mortgage along with your existing payments. Having a high enough income can give you a better debt-to-income ratio, allowing you to apply for a mortgage even if you’re still paying off your student loans.
Myth #3: Your budget should be based on what your lender approves
When a lender pre-approves your mortgage application, they base it off on several factors, including your income, credit score, financial history. The loan amount that gets approved may sometimes be higher than your budget since your lender will most likely approve the highest amount you can afford. That doesn’t mean you have to borrow that exact same amount.
Remember, the loan amount you qualify for is entirely different and independent of how much you can afford and are willing to pay for.
Myth #4: Finding the perfect house is easy if you look hard enough
If there’s one myth that every first-time home buyer should know the moment they decide they want to buy a house, it is that there’s no such thing as finding a perfect house. You’ll find that you always have to compromise on something. Yes, the perfect house that checks every box on your wishlist is probably out there waiting for you to find it—but it might not go well with your budget. A fully furnished deck or heated bathroom floors may be a non-negotiable on your list, but that could easily add a few thousand dollars over your expected amount and budget. It still comes down to what you can actually afford to pay for!
If you want to get the best deal for your home, knowing the facts from the myths when it comes to home buying is a must. Understanding mortgages and real estate financing can be a lot to take it in, but it gets easier once you know which details are valid and which of them are just unfounded claims. If you ever find yourself a little overwhelmed, seek help from an experienced home buyer or a financing expert.
Whatever kind of loan you need, it’s best to work with trusted finance professionals. FinanceCorp will make sure you get the best possible deals. Whether it’s business loans, home loans, auto financing, or debt consolidation, our team is here to help and take the stress out of financing. All of the Finance Managers at FinanceCorp are fully qualified, trained, and experienced mortgage professionals who live and breathe finance. Contact us and get a better loan today!