Home Loan & Home Buying Myths To Ditch Today
So, you think you’re ready to take the jump from renting to home ownership? If you have been thinking lately about becoming a homeowner, you have probably started doing research online, or have enlisted the guidance of family and friends who own a home. Sadly, there are many misconceptions regarding home buying readily available both online and through word of mouth. That’s why we’ve compiled this list of the top 9 home buying myths to squash before you apply for a home loan.
Put These 9 Home Buying Myths Out Of Your Mind
- I Need A Huge Down Payment
While many mortgage lenders will require you to put a 20 percent down payment on a home, there are other mortgage lenders who do not have such strict requirements. At Launch CU we believe in providing those in the communities we serve with affordable home loan products. That’s why we offer home loans with down payments as low as 3%. Whether you are looking for a home loan in Melbourne, Florida, or a home loan in Daytona, Florida, our low down payment option remains the same. It is our goal to provide affordable home loans for those in Brevard County Florida and Volusia County Florida.
- There’s No Way I’ll Qualify… My Credit Score Is Too Low
If your credit score is holding you back from applying for a home loan, keep on reading. Many people believe you have to have A+ credit to get approved for a home loan; this is not necessarily the case. While having a credit score in the 700’s will improve your chances of getting approved for a mortgage with a lower interest rate, there are many other factors that are taken into consideration when a mortgage lender reviews your mortgage application. Utilize FICO’s® loan savings calculator to help you determine how your credit score would impact the interest you pay on a mortgage, and remember a friendly Launch CU Home Loan Specialist is only a phone call away.
- You Can Skip The Inspection
Some people may try to convince you to skip out on a home inspection, and it may be very tempting to do just this if you feel like you will lose your dream home while waiting for an inspection to take place. Under no circumstance should you skip on a home inspection. Skipping a home inspection means you are buying the home as-is, which includes any potential problems that come along with it. This could be a very costly mistake in instances of mold or asbestos issues, or a leaky pipe or roof. Remember, a serious problem may not always be visible to the naked eye.
- The First Step Is Shopping For A Home
If you’re a typical first time home buyer in Florida, chances are you have already went online to start shopping for a home. While this may seem like a logical first step, it unfortunately is not the correct first step. The first step in your home buying journey is to understand how much you can afford. Utilize a home loan calculator to help you understand what you can afford before you start shopping, and a home loan payment calculator to help you understand what you could expect your monthly mortgage payments to be. This will save you time and disappointment when you find out that you are not able to afford the home you fell in love with online.
- The List Price Is The Final Price
Think back to the last time you bought a car. Did you pay the full asking price, or did you negotiate to get a better deal? Buying a house is much like buying a car. The offer you make on a home does not have to be the asking price. Enlist the professional help of a real estate agent who knows your local market to help you determine a reasonable offer. If you have an inspection done, and the inspection returns issues, you can use those issues to your advantage to negotiate a lower home price.
- A 30-year Mortgage Is Always The Best Option
Thirty-year mortgages are very popular among first time home buyers in Florida, but that does not necessarily mean applying for a 30-year mortgage is the best option for you. For instance, if you choose a 15-year mortgage, your monthly payments will be higher than a 30-year mortgage, but with a 15-year mortgage, you will pay less in interest over the term of the loan.
For example, when you first start to pay off your mortgage, your balance is high, thus a great majority of your payment goes towards interest rather than principle. As your balance begins to decrease over time, the amount of your payment that goes towards interest will decrease, and the amount of your payment that goes towards principle will increase. With a 15-year mortgage, your balance gets smaller quicker since your monthly payments are higher than your payments with a 30-year mortgage. Thus, with a 30-year mortgage, you pay more in interest throughout the entire term of your mortgage. Utilize Launch CU’s mortgage calculator or mortgage term comparison calculator to help you pick the right mortgage term for you.
- Lowest Rate Trumps Great Service
It may be tempting to choose an online mortgage lender with the lowest available rate; however, keep in mind you will be dealing with this lender for a significant amount of time. Even if you refinance, it won’t be for many years. Since a mortgage is a long-term commitment, you need to consider great service in addition to low rate.
You want a mortgage lender who is easy to reach, and provides prompt responses. Nothing is more frustrating than trying to track down a mortgage company located half way across the country, or even overseas for a simple question. You could wait days, if not weeks for a response once you finally do reach them. At Launch CU we offer top-notch mortgage servicing along with highly competitive mortgage rates. Plus, we won’t sell your mortgage, which means you will always know who to contact should you have a question. We understand buying a home can be an intimidating process. That is why we are there every step of the way.
- Renting Is Always Cheaper
If you have ever Googled, “Is owning a home cheaper than renting”, you probably returned millions of results all with different perceptions. You may have even enlisted the advice of friends and family members to help you answer this question. If you have concluded that renting is always cheaper than buying, you would not be correct. In fact, according to research by Trulia, nation-wide it is 35% less expensive to own a home than rent. While there are many added responsibilities when you become a homeowner, every payment you make will help you build equity.
- I Won’t Be Responsible For Any Closing Costs\
It is a popular myth that the seller of a home is responsible for paying all closing costs. While this is true in some instances, it is more common for the seller to be obligated to pay for some closing costs, but not all. Thus, it is important to factor closing costs into your home buying budget.
Am I Ready to Apply For A Home Loan?
Whether you are ready to become a home buyer now, or in the distant future, it’s important to remember these nine home buying myths before you start your home buying journey. A priority is to find a mortgage lender that offers competitive mortgage rates and great servicing. Remember, you will be in a partnership with this mortgage lender often times for decades. You want to pick a partner with a good reputation and a history of offering personalized one-on-one service.
For more information about Launch CU mortgages, visit our mortgage page or contact a Launch CU Home Loan Specialist today at 321-456-5439. We are here to serve you.