Whether you’re reaching out to renters, reassuring first-time homebuyers or giving repeat buyers a refresher on home financing, you may run into some of the following misconceptions. We’ve written a few articles to help you fight back with mortgage facts.
1. I need a sky-high credit score to get a mortgage.
FALSE. Sure, a credit score in the 800s may get your client a better interest rate or a lower down payment requirement, but a score of 620 or higher is acceptable for many lenders on a variety of loan types. Some may even approve FHA loans with a score as low as 500.
Share this: What Credit Score Do I Need for a Mortgage?
2. I have to save up 20% for a down payment.
FALSE. A 20% down payment is great, if your clients have it. But, it doesn’t have to be a roadblock if they don’t. It’s possible they could buy sooner, or buy a better home, if they explore financing options with down payments as low as 5% or even 3.5%.
Share this: What Down Payment is Needed for an FHA Loan?
3. FHA loans are only for first-time homebuyers.
FALSE. Conventional loans are often more attractive for repeat buyers, but FHA loans are still an option.
Share this: Deciding on a Conventional vs. FHA Home Loan
4. I already used up my VA loan benefit.
FALSE. Eligible buyers can obtain a VA loan for a new residence, even if they bought a previous home with a VA loan. They just can’t obtain multiple VA loans at the same time.
Share this: Who Can Qualify for a VA Loan?
5. I can’t qualify for a mortgage if I have other debt.
DEPENDS. Debt is definitely a consideration when applying for a home loan, but it isn’t always a deal-breaker. Buyers with a debt-to-income ratio of 36% or less, a solid employment history and otherwise healthy finances may find it makes sense to buy instead of continuing to rent.
Share this: Student Debt and Buying a Home
6. It’s better to skip a starter home.
FALSE. Some buyers think that their first home should be their Dream Home, and the idea of buying now and upgrading later seems wasteful. A few may even believe that homes, like cars, automatically lose value through age and use. While no one is guaranteed a profit on a home sale, many Americans have found equity from their first home can be a valuable part of future home purchases as their means and needs change over the years.
Share this: Renting May Be a Roadblock to Your Dream Home
7. Mortgage payments are higher than rent.
DEPENDS. Rent and home values vary by region. Mortgage rates vary by individual borrower and current market forces. Your clients may find that a mortgage payment is comparable to what they’re paying in rent—or maybe even lower. Encourage them to crunch the numbers and get a good idea of how homeownership could change their finances. They may be surprised by how much they can afford!
Share this: How to Use a Mortgage Calculator