There is nothing more fulfilling than being able to purchase your dream house for the first time. Although the experience is indeed exciting, keep in mind that the entire real estate process can be quite overwhelming and intimidating for you as a first-time homebuyer. It will look like there are many considerations to make—from getting a mortgage preapproval to searching for prospective properties down to closing the deal. Also, you’ll be bombarded with information about the home buying process, some of which are just misconceptions! If you are currently looking for your first home.
Four Common Myths About a Home Purchase
- Myth 1: You need a 20 percent down payment (DP). In some cases, mortgages will require you to deposit a 20 percent down payment, especially for conventional loans offered by private lenders. However, this isn’t a hard and fast rule. The thing is that there are many other options you can choose from. Some of these are unconventional loans insured by the government, such as Federal Housing Administration or FHA loans (3.5 percent), Veterans Administration or VA loans (zero DP), and US Department of Agriculture or USDA loans (zero DP).
- Myth 2: You can opt-out of PMI. For the uninitiated, private mortgage insurance (PMI) is a type of mortgage insurance you’re required to pay for the lender’s protection. It is usually included in your monthly contractual payment (MCP) when you have a conventional loan and make a down payment of less than 20 percent. However, you cannot opt-out of this PMI once you agree to get this loan unless you opt for an unconventional loan or refinance your current mortgage.
- Myth 3: You cannot buy a house with poor credit standing. In essence, it will be harder for you to apply for a home loan with a low credit score. Yet, it doesn’t mean that you won’t be able to purchase a house at all once you have a glaring credit history. As mentioned, you can still opt for unconventional loans that the government backs up. Even some private lenders are quite considerate enough to let you borrow money for a home purchase. Here at Mortgage City, we are committed to helping you find the right mortgage loan, most especially if you’re a first-time homebuyer. As a leading local mortgage lender in Royal Oak, our ultimate goal is to fulfill your financing needs and make you a satisfied homeowner!
- Myth 4: Your monthly contractual payment will be based online. Most first-time homebuyers will do their homework and search online for potential mortgage lenders. They will visit some websites and use their mortgage calculators to determine how much they can borrow and see their MCPs. Jared Lincoln of Mortgage City quoted, “The problem is that they immediately assume that the information they collected is going to be their monthly payments moving forward. The best course of action here is to get a mortgage preapproval to determine your actual MCP.”
Mortgage Lenders in Michigan: Mortgage City
At this point, we’ve debunked four common misconceptions that many first-time homebuyers have. To that end, be sure to consider all the valuable information discussed above so that you’ll know the actual truths and be properly guided in your journey. Ultimately, it’s best to work with the right mortgage lender that can provide you with the best deal and get a realtor who can help you every step of the way! We’re a leading mortgage lender in Michigan that helps clients get the best home loan, whether buying a house or refinancing a mortgage. If you’re a first-time homebuyer, connect with us today at (248) 930-8709 to get a free quote!
