The decision of buying a home is a big one and usually first time home buyers are plagued with doubts about the whole process and turning towards friends and family is a common thing to do. While these sources do provide useful tips and information, they can also give rise to certain home buying myths. From exorbitant down payment amounts to stellar credit requirements – these myths can sometime be so negative that you may drop the whole idea of buying a place for yourself.
Myths That Aren’t True
Let us take a look at some of the myths that are not true about home buying and loan eligibility:
- You need to pay 20% down payment – It is true that traditional loans require a 20% down payment, there are still loans programs like FHA, VA as well as USDA loan programs that require as little as 3.5 or even zero percent down payment.
- You need to have a stellar credit history- Traditional loan programs do require a good credit record, however USDA as well as the FHA loan programs have very lenient credit requirements where the score can be as low as 580 to qualify
- Outrageous closing costs – Typically the closing costs are just 2 to 5 percent of the total purchase price of the home and it is always a good option to have a clear picture of all the closing costs such as a credit report, a survey fee, title services, an attorney fee, and property insurance before upfront.
- Income determines how much you borrow – Your debts can play an important role in deciding the amount of loan you will get but your annual or monthly income is not always a determining factor
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