Let us take a look at the myths that are a common topic of discussion during mortgage. Many conventional wisdoms are not truly the case in reality.
Myths:
- Do not buy a home in winter- Spring being the most popular time to buy a house for yourself and your family, does not necessarily mean you should not buy a house during winter or season end. You can actually put this belief into your advantage- as the competition would be less from other home buyers and potential customers.
- Although a good credit score is a healthy choice in keeping your finances straight. But it is not mandatory that you have to keep a high credit score to be approved for a loan. There are multiple options where a low credit score holder can also apply for a home loan.
- There is no hard and fast rule to make a compulsory 20% down payment. This rule of thumb is not necessarily the only possibility in an agreement or a transaction. There are abundant available down payment options and choices and special loan programs for smaller down payments rates.
- Do you believe the only up-front cost of your new home is the down payment you are expected to pay? Well, No! You have to be flexible in observing and noticing the closing costs while making a transaction for wherein you invest such a huge amount. The closing cost in general varies from 2-5% of the loan amount.
- You can book the home with a check- The most dangerous and a problematic choice is to invest without calculating and considering other factors. Do not jump to buy a homeDo remember to keep in mind the moving expenditure or relocating expenditure, the actual cost of the home, savings for emergencies while calculating your budget.
It is important that you do not drain yourself completely i.e. do not empty your savings in order to buy a home. There are multiple factors to consider such as-
It is important that you do not drain yourself completely i.e. do not empty your savings in order to buy a home. There are multiple factors to consider such as-
- Relocating expenditure
- Transportation expenses
- Education fees of your children
- Monthly household expenditure like groceries, cleaning materials, repair services
- Medical needs
- Emergency funds
- Clothing
- Tax
- Miscellaneous
You can always look up to your team of mortgage advisors for answering your queries-
- Amount you need to save for a down payment- In general you need 20% but this is not always the case. The down payments are sometimes even less or nothing at all.
- You may also discuss with your loan officer in order to lock in the interest rates so that the payment does not vary monthly.
- Getting prequalified for a loan is a good choice. You can always look into your credit score and ask for an estimate, the loan amount you are eligible for.
- Special mortgage programs and loan types are always available. You need to ask your officer to check whether you are eligible for such programs or not.
- Understanding the fixed and adjustable rates of interests for a loan is a must before making the final agreement papers.