Mortgage misinformation can stop people dead in their tracks from achieving their ultimate goal of buying a house. Many people avoid even starting the mortgage process because of some of the myths out there.
Here are four mortgage myths that you might hear around the internet, and what the truth behind each one actually is.
“My Credit Score Isn’t Perfect, So I Can’t Qualify.”
Many people believe that unless your score is above 700, there is no way that you can qualify for a mortgage. Not only is this untrue, but it can also lead to dangerous practices aimed at artificially inflating your credit score.
While it is true that the higher your credit score, the better your chances of qualifying, it’s not necessarily true that a perfect score is required to qualify for a mortgage. The average FICO credit score for many first-time home buyers is 691. In fact, we regularly see mortgage approvals with credit scores as low as 580.
“Renting is Cheaper.”
On the surface, renting is a far more affordable option than buying a house. While this could be true in the short term, there are a few obstacles to long-term renting.
Rent may seem cheap at first, but landlords can always raise rent prices and make things exorbitantly expensive. Compare that to a fixed rate mortgage, where your principal and interest payment will not change regardless of the market.
Short-term renting also doesn’t build equity, while continually paying your mortgage on time builds wealth.
“I Have Debt, So I Don’t Qualify.”
Almost everybody has some type of debt. Whether that be credit cards, student loans, Medical bills, or any other kind of payment plan you’ve created. Many think that just because you have some debt, you are automatically disqualified from buying a home.
When you first go through the home-buying stages, lenders will often pull your debt-to-income ratio (DTI). Many conventional and FHA mortgages accept debt-to-income ratios as high as 50%. Just because you have debt, and maybe more than most, doesn’t mean you can’t live your dream.
“My Mortgage Needs To Get Paid Off Immediately.”
Paying off your mortgage fast seems like a dream. Once you pay off the mortgage, you own the house in full and can do whatever you want without the burden of a monthly payment. Oftentimes, this is wrong.
Paying off the mortgage as quickly as possible can be highly problematic for your budget, limiting expenses and potentially slashing your emergency fund if something goes wrong at home or in your life. Making on-time payments on what you owe can increase your home equity, giving you more options over time rather than paying it all up front.
Many financial advisors would suggest having a reasonable monthly payment and investing the difference so at a later date, you can pay off your mortgage at any time.
Conclusion
Make sure you consult with trusted experts who will tell you not what you want to hear, but what you need to hear about getting started.
Whether you are a first-time buyer or looking to refinance, My Easy Mortgage, a reputable mortgage broker located at 2405 Creel Lane, STE 102, Wesley Chapel, FL 33544, and 16703 Early Riser Ave, Suite 266, Land O’Lakes, FL 34638, has a team of experienced professionals who can guide you through the process. Contact them at (813) 513-9846 to discuss your mortgage needs.