At Professional Mortgage Solutions, we believe that educating our clients is key for our mutual long-term success. There is a lot of misinformation about home loans that can create confusion for would-be homeowners, especially those who are purchasing their first homes. In this week’s blog, we would like to dispel some common mortgage myths in the hopes of helping would-be homeowners gain some clarity. To learn more about your options for home financing, contact our team in Rego Park, NY, to schedule a consultation and get a free quote. Read our blog in the future for answers to more mortgage myths and more insight into the business of home financing.
Myth: Having a mortgage is more expensive than renting.
Truth: Not necessarily. In many cases, monthly mortgage payments are less costly than rent. It’s important to remember, however, the different costs that are included in your rent versus those out-of-pocket costs that come with owning a home. If something in a rental home needs repair, for example, the property owner is usually required to pay for repairs. If you own a home, you’re solely responsible for the cost of any repairs. You will also want to consider the upfront costs associated with owning a home. When you buy a home, though your monthly payments may be less expensive than renting a home, you will need to supply a down payment and cover closing costs. If you’re renting, you’ll only need to pay for a deposit, which usually ranges from one to three months’ rent.
Myth: You must be in great financial shape to get approved for a good home loan.
Truth: It’s true that you shouldn’t buy a home unless you’re financially stable, even if you can get approved for home financing. You do not, however, need to have excellent credit or a perfect financial record to be eligible for an affordable, competitive mortgage. Several nonconventional home loans, like FHA loans and USDA loans, were specifically created for potential homeowners who may be financially stable but who have less-than-great credit or may not have a lot of cash on hand for a down payment. Conventional loans have more stringent approval requirements, but they, too, may be an option in certain situations for those without excellent credit.
Myth: You need to raise a substantial amount of cash for a down payment on a home.
Truth: There are all types of home financing solutions with little to no down payment requirements. Nonconventional loans, especially, have some of the lowest requirements. VA loans, which are only available to veterans, servicemembers, and certain others, have a 0% down payment requirement. FHA loans have down payment requirements ranging from 3.5-10%. USDA loans for rural development also have no down payment requirement, though they also have income limitations. If you’re set on securing a conventional loan, you may be able to get a piggyback loan in addition to your regular mortgage, which means you can incorporate some down payment cost into your monthly mortgage payments, rather than paying it all up front.
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Mortgages can be confusing; that’s why there are professionals to help you through the journey of buying a home. Contact Professional Mortgage Solutions in Rego Park, NY, for more answers to common mortgage myths. We also offer complimentary consultations and can help guide you through the different mortgages available to you.