If you're a first-time homebuyer, know that you're not alone. Over 45% of homebuyers are doing so for the first time, and we love to help first-time buyers make it happen in the smoothest possible fashion. Financing is often the most confusing part, but with our help, we can make it fast, easy, and even enjoyable!
Here's what most first-time buyers wish they knew before they started the homebuying process.
Down Payments: The Myth of 20%
Worried that if you don't have a big down payment, you can't buy? Not true! One of the biggest misconceptions about home financing is that a 20% down payment is required for homeownership.
Several home financing options offer 0-5% down! Although it's important to note that anything less than 20% will often require mortgage insurance. But even then, the opportunity to purchase real estate, even with the insurance requirement, is highly advantageous to first-time homebuyers.
Loans Aren't One-Size-Fits-All
Just as homes come in different styles and price points, so are the ways you can finance your home purchase. There are several loan options; it's just about deciding which is best for you. That's where a trusted loan advisor comes in.
Many may assume the best choice is the classic 30-year fixed loan, which offers many advantages, such as a set interest rate. But it may not be the best fit.
For example, a government-backed loan might be a good option if a low credit score is your primary hurdle. FHA, VA, and USDA loans offer impressive financing options for people with lower credit scores, low down payments, or people looking to live in a rural area.
Getting Pre-Approved Early Matters!
Pre-approval plays a major role in buying a home, and shopping without it can become a significant barrier. In fact, doing it early on will prove to be beneficial.
Getting pre-approved before home shopping will help you shop within your budget, avoiding potential disappointment down the road.
Doing it early also helps you catch any errors on your credit report to give you time to fix them. A higher credit score could mean a lower interest rate, which could translate to saving tens of thousands of dollars in interest payments over the life of your loan.
Most importantly, getting pre-approved may also prove to realtor agents that you are a serious shopper. Buyers who use an agent are more likely to request pre-approval, suggesting that their agent highly recommends pre-approval.
The Bottom Line
It's valuable to research different loan types to guarantee you're getting the best possible choice for your unique financial situation.
Of course, you don't have to do it alone --that's why we're the professionals! We work on your behalf, not the sellers, to ensure that your best interest is at the forefront as you purchase your first home.
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* Specific loan program availability and requirements may vary. Please get in touch with the mortgage advisor for more information.