Don’t get caught up something that’s not true!
Buying a home is a major life decision that involves a significant financial investment. Unfortunately, there are many myths and misconceptions that can make the process more difficult and stressful than it needs to be. In this blog, we will explore some of the most common homebuyer myths and debunk them with the help of reputable sources.
First myth is that you need a 20% down payment that can help you avoid private mortgage insurance (PMI) and qualify for better rates, it’s not a requirement. According to the National Association of Realtors, the median down payment for first-time home buyers is 7% and the average down payment for all buyers is 12%. There are some programs available that offer a down payment assistance to those who qualify.
Second myth is that you need a perfect credit score to buy a home. Having a good credit score is important when it comes to getting approval for a mortgage, but it doesn’t need to be perfect. According to Experian, a credit score of 620 or higher is typically required to qualify for a conventional mortgage, while a score of 580 or higher may be sufficient for an FHA loan. However, keep in mind that a higher credit score can help you qualify for a better interest rate and terms.
Third myth to debunk is that you should buy as much home as you can afford. Just because you qualify for a certain mortgage amount doesn’t mean you should borrow the maximum. You should consider your budget and lifestyle when deciding how much house you can afford. Zillow recommends that your total housing payment (including mortgage, taxes, and insurance) should not exceed 30% of your gross monthly income.
Fourth myth is that you can’t buy a home with student loan debt. Having student loan debt can make it more challenging to get approved for mortgage, but it doesn’t necessarily disqualify you. According to Bankrate, lenders will look at your debt-to-income ratio (DTI) to determine if you can afford a mortgage payment. A DTI of 43% or less is typically required for a conventional mortgage, while an FHA loan may allow DTI of up to 50%.
Lastly out myth number five is that you don’t need a home inspection. A home inspection is a crucial step in the homebuying process that can help uncover any potential issues with the property. Skipping this step can leave you vulnerable to unexpected expenses and repairs down the line. According to HomeAdvisor, a typical home inspection can cost anywhere from $300 to $500, but it’s well worth the investment.
In conclusion, there are many myths and misconceptions about buying a home that can make the process more confusing and stressful than it needs to be. By doing your research and working with trusted professionals, you can avoid pitfalls and make an informed decision about one of the biggest investments you’ll ever make.
National Association of Realtors. (2021). Profile of Home Buyers and Sellers. Retrieved from https://www.nar.realtor/research-and-statistics/research-reports/highlights-from-the-profile-of-home-buyers-and-sellers
Martin, Erik J. “Student Loan Guidelines for a Mortgage.” Bankrate, www.bankrate.com/mortgages/mortgage-student-loan-guidelines/. Accessed 15 May 2023.
Ben Luthi. “What Credit Score Do I Need to Buy a House? – Experian.” Www.experian.com, 3 June 2022, www.experian.com/blogs/ask-experian/what-credit-score-do-i-need-to-buy-a-house/. Accessed 15 May 2023.
Minnesota Homebuyer’s connection (2022) Minnesota Homebuyer’s Connection. Available at: https://mnhomebuyersconnection.com/ (Accessed: March 24, 2023).
Stay connected to us on Facebook: Minnesota Homebuyer’s Connection | Facebook