by Jodi | Dec 31, 2019 | First Time Home Buyer, Interest Rates, Mortgage, Mortgage Advice, Mortgage Blog, Mortgage broker, Uncategorized | 0 comments
Red Deer renters are much more likely to qualify for a new home loan than they think they are. A large number of clients of Red Deer mortgage brokers say they wish they’d talked to us sooner because they learn that they could have bought their dream home years ago. Let’s look at the myths that too often cause people to stay on the sidelines.
Myth 1: Interest Rates Prevent Me From Qualifying
The interest rate will affect the house payment. So, too, does your credit. And so will the cost of the home. You may not qualify for a $500,000 house, but you might qualify for a $400,000 one. You might get a manageable interest rate if you clean up your credit, making you a lower risk.
Myth 2: I Have to Have a 20 Percent Down Payment
There are several variations of this myth. One is that you have to have 20 percent down to qualify for a home loan. That’s not true. You could buy a home with 5 percent down. In some cases, you might qualify with 3 percent down. Another variation of this myth is that private mortgage insurance is something to be avoided at all costs. In reality, it is a modest addition to your mortgage payment, and it will go away once you have 20 percent equity in the property. One-third variation of this myth is that you need to save 20 percent down for your dream home and what you think it costs. Talk to a Red Deer mortgage broker and real estate agents to know what your dream home will really cost. Your dream home may cost much less than you expect.
Myth 3: My Credit Isn’t Good Enough
You don’t need perfect credit to qualify for a home loan. Your interest rate will be higher if your credit is less than perfect, but you could still qualify for a home. The odds you’ll qualify will go up with every step you take to reduce the lender’s perceived risk. For example, adding a co-signer to the loan or having a 20% down payment can result in a competitive interest rate on your home loan. Clean up your credit by getting control of your bills and paying down debt, and you may qualify for a lower interest rate, too.