When it comes to purchasing a home, myths and urban legends abound. Get your mortgage facts straight. Here are some common misconceptions about that crucial first step to owning your own home:
You Need Perfect Credit
The idea that you need a spotless credit history to own your own home is common. It is true that the better your credit, the lower your interest rate. But, you don’t need perfect credit to buy the home of your dreams. Most people have a blip or two on their reports; just make sure you’ve consistently paid your bills on time and that you have a decent debt-to-credit ratio. Your mortgage broker will look at your individual situation; there is no standard formula.
You Have to Put 20 Percent Down
If you look at a home on Zillow, you will see that most mortgages are calculated on a 20-percent down payment. There is no hard-and-fast rule, however, and there are several types of loans that require zero down. The main benefit to putting 20 percent down is that you won’t have to buy private mortgage insurance.
Prequalification is a Guarantee
Most people think the amount of money they pre-qualify for is the amount they will receive. Prequalification just gives you a ballpark figure of what you can spend. Even once you have approval, you need to pay your bills on time and monitor your finances through closing.
If you need help securing a mortgage, please contact the experts at First Choice Lending Services, LLC.