5 Common Myths About Buying A Home


I Don't Have Enough For A Down Payment/Closing Costs



It’s commonly thought a 20 percent(%) down payment is necessary in order to buy a home. Though there are benefits to having a larger down payment, most down payment minimums are between 3 percent and 5 percent. For homes in certain areas, the down payment could be as low as 0 percent. Veterans, active duty military and reserves personnel, as well as their family, may also qualify for a zero down payment loan. There are even down payment and closing costs assistance programs available depending on your occupation, location and/or income.

Point is, there are many options available that do not require a full 20% down payment.



I Can't Afford The Monthly Payment Increase



If you cannot afford a payment increase, then definitely do not purchase a home that would result in an increase for you. You might be surprised to know how much you can save with the same monthly payment (while simultaneously building your wealth).



Buying ($155,000 Home)

Monthly Rent Payment: $1,200

Monthly House Payment: $1,215¹
(including principal, interest, taxes)

Annual Rate Increase: 3%

Annual Home Appreciation: 3-4%

Tax Deductions: None

Tax Deductions: Interest and real estate taxes paid
(approximately $304)²

Net Rent Payment = $1,200/month

Net House Payment = $911³

After 5 Years = $72,000 cost

After 5 Years = $54,660 net cost


Equity/Wealth Gained = $0

Equity/Wealth Gained = $41,270

(¹example scenario assumes 5% down payment, 4% interest rate (4.169% APR), 2.5% property taxes, and 0.8% homeowners insurance included in payment on a 30 year fixed rate mortgage. ²approximate. ³determined by subtracting tax deduction from house payment and assuming 25% tax bracket).



It's Too Complicated



It is more complicated if you choose to go at it alone. As mortgage experts, we will not only walk you through the process hand-in-hand, but completely simplify the steps you’ll need to take to successfully buy your home. After answering a few questions and providing some requested documentation (tax returns, pay stubs, driver's license, etc.), you will be well on your way.



Home Repairs Are Too Expensive



Home repairs and maintenance are an important part of owning a home. However, the costs are minimal compared to the overall savings. While there are the occasional big expenses like buying a new A/C unit every 15-20 years, it is more common to fix minor things like touch up paint, weather stripping, changing the batteries in the smoke detectors, and other small things that end up costing hundreds each year, not thousands.



My Credit Is Not Good Enough



While this might be true, don't be so sure without looking a little deeper. There are a multitude of loan programs and some allow for a credit score as low as 620. Some loans even allow for no credit scores at all. If the reason for your low score is due to a medical collection(s) from a rough patch that has since passed, you might still qualify for an FHA loan that is more lenient given those circumstances than a conventional program might be. Even if you don't qualify right now, a mortgage expert can review your credit score with you and provide helpful tips to improve your score and put you on a plan to qualify in the near future.

IMPORTANT NOTE: Don't rely on the "free" credit reports you receive from certain online websites. A mortgage professional can run a full tri-merge report from all three bureaus that monitor and report credit (Experian, Equifax, Transunion) to give you the full picture. Additionally, these full reports are what lenders actually use to base your mortgage qualification upon. The "free" scores websites typically use a different scoring model.


If you have any questions about the above, or simply just want to talk about the next steps to get started with purchasing a home, please do not hesitate to reach out to me and my team. We are here to help you every step of the way.

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