5 FIRST-Time home buyer myths
If you’re in the process of buying a home for the first time, you probably have some questions about the best way to find and finance your dream home. Our goal is to make sure you have the education and support you need – that starts with dispelling some common myths about mortgages and home buying.
Myth 1 – You shouldn’t put less than 20% down
It’s true that a down payment above 20% means you won’t need to pay for private mortgage insurance (PMI). That said, for borrowers with great credit and a steady income, putting less than 20% down can be a financially-sound option, allowing you to start investing and building equity sooner. In fact, around three-quarters of my buyers put less than 20% down on their homes. Programs exist for 0% down (ZERO) here in Orange County!
Myth 2 – You can’t get a mortgage if you have student loans
Haven’t been able to save for a down payment because you’ve been paying off student loans? Don’t write off home ownership just yet. The other important thing to remember is how lenders view debt. Lenders won’t look at how much your total student debt is, but how much you pay each month towards those loans and how your monthly debt compares to your monthly income.
Myth 3 – You should avoid adjustable-rate mortgages (ARMs)
After the 2008 housing crisis, many buyers were wary of adjustable-rate mortgages (ARMs). But if you’re planning on selling (or refinancing) your home within 10 years, opting for an ARM instead of a fixed-rate mortgage could save you thousands. It’s more common than you may think. According to the National Association of Realtors, homeowners aged 37 years and younger sell their homes after an average of six years.
Myth 4 – You won’t qualify for any savings programs
Many of my borrowers are eligible for a first-time home buyer benefit. The federal government and state governments have large numbers of programs available, with down-payment assistance, below market interest rates and rebates on your federal taxes, to name a few. The names are a jumble of acronyms, MAP, DAP and MCC to name a few. You should work with a professional who knows these programs thoroughly who can best assist you. Eligibility for these programs vary, and will be based on your location. In Orange County the maximum income for a couple for any of these programs is $131,160 per year., the way you earn, the median income in the area where your home is, or your first-time home buyer status. (As long as you have not owned a property in the past 3 years, you are considered a first-time home buyer.)
Myth 5 – Your pre-approval is good for any home
Even if you’ve been pre-approved to buy a home at a certain price, the specific property itself can impact how much you’ll ultimately be able to borrow, as well as the final cost. For example, the cost and terms of your mortgage can be affected by things like property type (condos and town homes may have higher rates than single family units), property tax rates, and homeowners association fees. And if a bidding war takes your offer even slightly over the area’s jumbo loan limit set by the federal government, your loan may come with different rates and eligibility requirements. )
Your friends or family know the best agent
Especially in a hot housing market, working with an experienced real estate agent is key. We suggest interviewing at least a few agents before making a final decision. Read online reviews, ask to talk to past clients, and most importantly, ask if the agent has recently closed on properties similar to what you’re looking for in terms of both price range and location. You’ll also want to check for a personality fit, too. Do you want someone who is patient and will guide you through the process? Or do you want someone who works fast and is straight to the point? Go with an agent that will suit your shopping style.
Need help finding the right real estate agent? While there is no obligation to use our suggested agents, we can help you save time and energy by introducing you to one who has been vetted by our team. Every agent we suggest has a strong track record of success in south County. Schedule a free consultation to learn more.