If you're considering buying your first home there are several myths floating about out there, and you probably heard a few of them. Since there are many, we're breaking this down into two parts.
This is Part 2, so if you missed Part 1, be sure to read that post as well.
5 First-Time Homebuyer Myths: Part 1
Let's continue where we left off. We want to put your mind at ease by BUSTING fiver more common myths. Let's run down the rest of our list.
6. Your Pre-Approval Is Good For Any Home
A lot of people believe this is the case, but don't just ever assume. You always need to have this discussion with your lender because your pre-approval may be for a specific loan type. Some loans have maximum loan amount limits which can affect your sales price. The location and condition of the home can also be things your lender needs to know about and can sometimes be limited by the type of loan you're applying for.
7. Your Pre-Approved Loan Amount Will Allow You to Borrower More Than the Purchase Price
People ask this all the time. Let's take as an example that someone is pre-approved for a $175,000 loan amount. Many people think they can find a home for $150,000 and then get an extra $25,000 to maybe payoff debt or use for something else. That isn't the case. If you're looking to make renovations to a home, then this additional money can possibly be structured into one of our Renovation Loan products where that money can be used to make updates and upgrades to the home. Otherwise, your purchase price is the starting point and your loan amount is based off of that.
8. You Only Need Money For the Down Payment
Every loan out there will have some sort of closing costs and prepaids in addition to any down payment requirement requirement. These costs will vary based on how your loan is structured and where you're buying. Be sure to talk with your lender and your real estate agent before making an offer so you're not caught off guard by these additional expenses. Many times, this can be negotiated into the contract for your seller to contribute to help pay some or all of your closing costs so you're not out of pocket for these expenses.
9. You Can Save Money By Not Using A Realtor
Most homebuyers don't know that the seller typically pays the commission for the real estate agents. One might think that not using a Realtor will save this money, but in most cases, this isn't true at all. Having a real estate professional in your corner can many times help you negotiate a better price. They can also advise you in ways to help save you both time and money in ways you wouldn't ever imagine if you had to go it alone. A good real estate agent will be able to help you look down the road for possible maintenance costs and help negotiate with the seller to fix these things before you buy the home. So if at all possible, use a Realtor when buying a home.
10. You Can't Get A Mortgage Because You Have Student Loans
Every loan program treat student loans different ways, especially if the loans are in deferment or if they have an income-based or graduated payment schedule. But to say you can't get a mortgage because you have student loans is just a myth. We help borrowers with student loans purchase homes all the time. So just ask! Let's see how we can help.
If we can help you in any way, feel free to reach out to us at 256-734-6012, or get a quick quote online.