When you’re shopping for your first home, family members and friends will waste no time giving you their personal advice. Unfortunately, a large percentage of that advice and information that they provide will most likely follow some of the more common myths about mortgages. Be aware of the following when you start the pre-qualification process for getting a home loan.
5 Mortgage Myths
- 20% down payment – while this is the amount that most individuals associated with buying a home, you can put as little as 3.5% down with FHA and $0 down with a VA loan. Obviously, the higher the percentage of down payment that you can afford, the lower your monthly loan payment will be. Keep in mind that putting 20% down eliminates having to pay for private mortgage insurance or PMI.
- Affordability – if you are able to cover your monthly rent when leasing or renting a house and have money left over to pay for a new vehicle, vacations, or other big-ticket items, then you can probably afford to purchase a home. However, it’s best to speak with an experienced mortgage specialist to see if you can pre-qualify for a home loan.
- Always look for the best interest rate – “best” in this case means lowest. And while a lower interest rate means lower monthly payments, you also have to consider closing costs, insurance, property taxes, and other expenses. Financing some of your closing costs, which will slightly increase your interest rate means that you won’t need as much to cover those closing costs.
- Excellent credit – there are several mortgage programs currently available to people with average credit scores. When you first start thinking about buying a home, you should start paying down as much of your credit debt as possible to decrease your DTI or Debt-to-Income ratio. Get a copy of your credit report and check for errors such as something you paid off but didn’t get recorded.
- Renting is better – while it’s true that you don’t have to worry about home maintenance and repairs when you rent, the reality is that you’re just handing your money over to someone else and will have nothing to show for it other than rent receipts. When you buy a home, you’re building an investment in the equity or value of that property. Buying is always better than renting if you can afford it.
Buying A Home in Denver with Front Range Mortgage
To speak with an experienced mortgage specialist regarding the purchase of a home, be sure to call Front Range Mortgage today at (303) 500-1900 or if you prefer, send us a message by clicking here. Our business representatives are here for your assistance. Call us now!