7 Home Buying Myths Resolved
MYTH: I need an excellent credit score to buy a home
FACT: You do not need excellent credit, you can purchase a home with a 600 credit score. To take advantage of better lending opportunities you should aim to have a credit score in the 700s or higher.
MYTH: I need to earn a ton of money to buy a home
FACT: You do not need to make a ton of money. You need to think strategically. Better housing options are available with higher income but if you make around $40,000/yr and purchase a multifamily, you could afford a much larger mortgage payment because your tenants are helping pay down your debt and their rent counts as additional income.
MYTH: I need to have a big down payment to buy a home
FACT: Typically, lenders want to see you have more money to put toward a down payment. FHA and Mass Housing allow for 3.5% and 3% down. There are also a few programs that provide down payment assistance.
MYTH: I’m more stable if I continue to rent versus buying
FACT: When you own, you control your payments, while taxes may increase, it is not a substantial increase and you have time to prepare. When you rent, you have no control over how much your rent will increased over time. If you had a great deal and your landlord realizes he could receive more money…once your lease term is over, he can increase your rent to the market rate.
MYTH: I need to live there until the mortgage is paid off
FACT: You do not need to live in the house for the life of the mortgage. You can purchase a home and rent it out one year later OR if the market appreciates, you can sell it within a couple years and cash out on all the equity. You can sell at any time.
MYTH:I should spend the maximum amount allowed
FACT: When you get pre-approved, you get a maximum amount to purchase a home. This does not mean you purchase a home at this price. Common sense says, look at your budget and purchase a home based on what you can afford on a monthly basis.
MYTH: Buying is always better than renting
FACT: We try to encourage home ownership but it is NOT always beneficial depending on your situation. If you do not know where you will be in 2 years, your job transfers you alot, your employment status is up in the air…buying may not be in your best interest. Generally, you want to live in a place for at least 5 years. There are always exceptions to the rule but generally, you do not want to incur debt if you have to leave and cannot find someone to rent your place at a higher price to cover your overhead.
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