If you’re like the majority of homebuyers in America, you’ll need to get a mortgage to purchase a new home. Before you begin your search, it’s important that you learn the truth behind these common mortgage myths:
You have to make a large down payment.
Yes, it’s true that the larger the down payment, the less you’ll have to pay off over time, however you don’t necessarily need to make a large down payment to secure funding. Federal Housing Administration Loans typically allow buyers to put down a 3.5% down payment as long as their credit score is in good shape. For people with minor blips on their credit score, the down payment minimum typically falls around 10%. Either way, there’s no reason to think that you have to break the bank to afford a down payment.
Pre-qualified and pre-approved are the same things.
Although many people use these two terms interchangeably, the truth is, they are actually very different. Pre-qualified means that you have sat down with a lender and casually discussed your funding needs, employment history and credit score. However, pre-approved means that the lender has actually gathered all of this information from you to formally review and verify it. After you get pre-approved, you will receive written notice from the lender that tells you what amount you’ll be eligible to receive to put towards your new home.
You have to have perfect credit to get approved.
Lenders don’t expect to only give out funds to homebuyers with perfect credit, although it does help sweeten the deal if you have a great score. Many lenders will give funding to homebuyers with issues on their credit report as long as they can prove without a doubt that they have a steady income and will be able to afford the monthly payments.
You should always choose the mortgage with the lowest interest rate.
Although the interest rate is definitely an important factor when choosing your mortgage, it’s not the only thing that you should consider. Many lenders entice homebuyers with slightly lower interest rates than their competitors, only to add in other hidden fees and costs. It’s important that homebuyers look at the full picture of a mortgage before deciding on one. It’s recommended that you talk to at least three different lenders before making a decision. Get each lender’s best offer and then compare them to each other to find the one that works best for you. Add up every cost associated with the mortgage, don’t decide based on the interest rate alone.
Now that you’re ready to secure funding from a lender, it’s time to find your dream home. Contact our team of real estate experts at Coast 2 Coast Realty who have years of experience listing and selling homes in the Tampa area.