Most home buyers enjoy talking about their new homes. They want to share their exciting new purchase and tell others how they can do it too. But every home buying situation is different and all that talk can be misunderstood. So, we at Primary Residential Mortgage, Inc. want to debunk some common mortgage myths you may have heard through the grapevine.
Myth #1: You must have a 20% down payment.
While having a good chunk of money to put toward a down payment can help with the cost of your loan and help kick start your equity, you don’t necessarily need twenty percent.* We offer a variety of loans for people in all kinds of financial situations, including little to no down payment options.†
*Possible loan scenario: 30 year term with 3.730% APR, a $245,471 loan amount, and zero down.
†Closing costs and fees may still apply.
Myth #2: You must have great credit.
Similar to our first myth, good credit can be more of a nice-to-have than a must-have. If you have perfect credit, kudos to you! You might get more favorable interest rates. But, if you have mediocre credit, or even a credit score that needs work, you have options. Talk to a PRMI Loan Officer to learn about FHA loans, VA loans or loans with adjustable interest rates. We’ll help to find a loan to fit your score.
Myth #3: Pre-qualified is the same as pre-approved.
Pre-qualified DOES NOT mean pre-approved.
Getting prequalified involves providing your Loan Officer with some basic financial information. Then they give you an estimate for how much you may be able to borrow. Getting pre-approved takes more work. The lender needs to collect and verify all the information and present it to the underwriter to get approved.
Myth #4: A 30-year fixed mortgage is the loan for anyone.
No loan is one-size-fits-all. The loan you need depends on your situation. How long do you plan to stay in the house? If it’s less than five to seven years, you may want an adjustable-rate mortgage (ARM) because they often have smaller interest rates the first few years. Are you near retirement age? If so, a 15-year fixed mortgage with no prepayment penalties might be what you want. Meet with a Loan Officer to discuss the options that are right for you.
Myth #5: Your down payment covers all your upfront costs.
In addition to your down payment, you will likely have other expenses when buying a home. The most common expenses are fees and closing costs. If you have a down payment, these fees can eat into how much goes toward the loan. Either way, they may affect how much you can afford to borrow.
Knowing these costs and planning ahead for them can help keep you within your budget.
Remember, every situation is different. Just because your brother had one experience when buying a home, doesn’t mean it’s that way for everyone. Know the facts and talk to a Loan Officer.