Mainstream Myths Believed by Most First-Time Buyers in Arizona
Buying a home can seem like a complicated and confusing process when you’ve never done it before (and sometimes even when you have). Even after you start reading information, you can still feel bewildered. Exactly how much money do you need to have for a down payment? How can you get the lowest interest rate possible – and how will you know when you do?
Working with a good Arizona mortgage lender will ensure that you get plenty of guidance and complete answers to all your questions through the process. It is also important that you learn some of the basics to guide you. Part of that is learning about the myths surrounding home buying and learning what not to believe. Here are some of the common myths about home buying that we hear from first-time buyers in Arizona:
Myth #1: Credit is Not that Important
You may know you have bad credit – or that your credit is not exactly stellar. But you may think that your income or your recent payment history will show that you can be a good borrower. The reality is that a low or even middling credit score can absolutely keep you from being approved for a mortgage. But even if you do get approved, you are likely to get approved for a subprime loan and one with high interest rates.
Your credit score is the most significant thing that an Arizona mortgage lender looks at when deciding whether or not to give you the loan. Do everything you can to bring up your credit score before you apply.
Myth #2: You Don’t Need Much for a Down Payment
There are so many loan programs out there that you might be fooled into thinking it’s ok if you don’t have much – or anything at all – for a down payment. After all, we live in the society of “no money down” financing. However, circumstances are a bit different for a mortgage.
The truth is that you need 20 percent of the house value as a down payment if you want to get the best loan terms – and don’t want to have to pay for private mortgage insurance, which will add to your monthly payment. You may be able to get a loan for less money down – as little as 3 percent in some programs – and you may be able to find programs that help you with down payment assistance. However, you’ll need to meet income guidelines for these programs, and you may not get the best rates possible.
Myth #3: You Don’t Need to Know the Upfront Costs Associated with Buying a House
You don’t just get a mortgage, sign on the dotted line, and get the keys to your new house. There are a lot of other costs you’ll need to pay up front, in addition to the down payment. You’ll need to pay closing costs, you’ll need to pay due diligence money, you’ll need to pay for a house inspection, and more.
Your mortgage lender and realtor can help you understand all the costs that you will be expected to pay so you can plan appropriately.
Myth #4: You Don’t Need to Talk to Multiple Lenders
You may visit a mortgage lender, get a quote, and think that’s it. You may either not have the time or energy to visit other lenders, or you may think that doing so won’t change the outcome. You may think that every lender is going to look at your circumstances and come to the same conclusions.
That’s not so. You can get vastly different offers from different mortgage lenders. Visit a few to make sure that you are getting the best terms possible.
If you are shopping for a new home in Arizona and most states, contact the KHoward Mortgage Team. We’ll help you understand all your loan options, and we’ll work hard to get you the best terms so that you can afford a home you’ll love. We’ll help you understand the home buying process and how much house you can afford. We also offer refinancing if you are already in a home and want to get better terms. Contact us in Arizona today to talk with a mortgage lender about your loan options.