Myth #1: My Credit is Bad
This tends to be the #1 reason that renters decide to stay renters. In reality, over half of all homes are bought with credit scores between 600 and 750. A number of factors influence credit scores – length of credit, overall debt to income, balances carried on credit lines, etc. Another facet to keep in mind is that your credit score pulled by a lender will often be different than ‘free’ credit scores you can pull offline. When looking at someones credit score for a home, the lender’s automated underwriting programs take into account different factors and information than traditional credit score sources. This often means that some renters who think their credit score is too low can be wrong. And we have seen several instances where just having a conversation with a lender can prove beneficial, as the lender will often be able to look over your credit report and suggest changes to what you’re paying or where you’re paying down debt that will have the biggest and quickest impact on your score.
Myth #2: I Need to Have 20% Saved for a Down Payment
Almost three quarters of all home buyers put less than 20% down on their new homes. 36% actually put 5% or less down on their homes, and with many Federal Housing Authority Loans (FHA), 3% or less is the norm, not the exception. There are also plenty of great programs for teachers and first responders, so it is always a good idea to at least have a conversation with a lender about what program you may qualify for!
Myth #3: I Don’t Make Enough Money to Cover a Mortgage Payment
In reality, if you pay rent, you do. Most rents are a mortgage payment PLUS 10-20% profit for the landlord. Not to mention the fact that rent prices have increased 22% nationwide in the past 10 years. The simple fact is, if you can afford to pay rent, you can definitely afford a mortgage and oftentimes we’re finding that people can not only afford a mortgage, but the mortgage payment is less than what they were paying in rent!
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A Millennials Guide to Homeownership
Buying a Home Summer 2017
