There is a lot of incorrect information out there that may persuade you not to pursue getting a home. Before you run in fear, talk to a lender first about your concerns, so we can help you know what is truth or myth.
Myth #1: You have to have a 20% down payment in order to get a mortgage – WRONG.
There are many down payment options. For instance, if you are a veteran, or buying in a rural location, you could potentially get into your new home with little to no down payment.
Several first-time homebuyer loan options start with a 3% down payment, and Federal Housing Administration (FHA) offers financing options starting with a 3.5% down payment.
With all of these down payment options, homeownership may be more BOOlievable than you think.
Myth #2: Being Pre-Qualified is the same as being Pre-Approved – WRONG.
Pre-qualification is based on un-verified information. This is an initial look at your application to make sure there are no major red flags that may prevent you from getting a mortgage. For example, a pre-qualification may use an estimate of your credit score and compare your income with your debts to see if you can support a mortgage payment. The pre-qualification process is quick and is based on information you provide to your lender. A pre-approval is a more extensive process where the lender uses verified information (e.g., your credit report and pay stubs) to determine which mortgage you actually qualify for.
Without a pre-qualification or pre-approval, home shopping may become a frightfully batty experience.
Myth #3: Shopping around for lenders will hurt your credit – WRONG.
Multiple inquiries can hurt your credit, but FICO allows for rate shopping by grouping all similar inquiries made within a 30-day timeframe as one hard-hit. This allows you to shop around as long as it is within 30 calendar days.
When shopping lenders, be sure to ask what fees they charge, what the interest rate and annual percentage rate (APR) are, and if you aren’t putting 20% down, what is the cost for private mortgage insurance (PMI).
Don’t be spooked by misinformation about mortgages. Talk to a lender and get the truth. I’m here to help you have a FANGtastic homebuying experience, even if you are not an RCB Bank customer. Connect with a local RCB Bank lender to get answers to your lending questions. Give us a call or visit our online Mortgage Center.