Separating Facts from Fiction:
These common misconceptions can be intimidating, especially when mortgage myths continue to persist for generations. Here are some facts that will help you debunk six common myths and bring you closer to your dream of homeownership.
Myth:
A 20% downpayment is necessary
Reality:
The median down payment is 14% and 8% for first-time homebuyers. Many loans allow as little as 3% down, and some require no down payment at all.
Myth:
Private mortgage insurance (PMI) should be avoided.
Reality:
PMI helps first-time buyers become homeowners sooner and lets move-up buyers consider more homes by leveraging their current investment.
Myth:
Higher down payments always results in better interest rates.
Reality:
A higher down payment can help with loan approval, but your interest rate also depends on factors like your debt-to-income (DTI) ratio.
Myth:
A low credit score is a deal breaker.
Reality:
A strong credit score can help with approval and rates, but lenders can guide you to programs that fit your score.
Myth:
Down payment assitance programs are only for low-income buyers.
Reality:
Some down payment assistance programs are designed specifically for first-time homebuyers or buyers in ertain geographic areas, while others are availablet o anyone who meets the program requirements. Ask your lenders if you meet the requirements for available programs.
Myth:
Student loan debt is a barrier to homeownership.
Reality:
You can still buy a home with student loan debt if you have solid, reliable income, are making consistent monthly payments and depending on other debts. Making regular payments can actually boost your credit score.
