Buying a home is one of those major life milestones, like graduating from college and landing your dream job. These days, though, it isn’t a goal that most young people assume is going to be easy to achieve.
My oldest son, who is in his early twenties, fears he may never own his own home. Thanks to hefty student loan debt, a highly competitive job market, and lower wages paired with higher than ever cost of living expenses – he isn’t wrong to be dubious. Here’s the thing, though. Most potential first time buyers are guilty of believing THESE TWO common myths about home ownership. And the facts may not only surprise you, but they may leave you feeling hopeful! (And they should!)
Here are 2 common myths which cause my potential buyers to hold off buying a home:
- Myth #1 – You have to put 20% down in order to purchase a home.
NO! There are so many loan programs available for first time buyers, with more opening up nearly every day! FHA is a fantastic option, and only requires 3.5% down! Did you further know that as a buyer, you are 100% allowed to negotiate for help covering your closing costs as a part of the offer you make on the home you’d like to purchase. That means that in many cases, people are able to buy their first home with as little as $5,000 due at closing. Or less!
Bottom line – ask your realtor for help connecting to a lender that is knowledgeable and experienced in working with first time buyers. AND make sure that your realtor is savvy at the negotiation table, to guarantee you get the best possible deal.
- Myth #2 – You need perfect credit to qualify for a mortgage.
It is true that the higher your credit score, the lower your interest rate will be, BUT there are a good number of loan programs available for buyers will lower scores. In fact, a survey done last fall indicated that over 50% of new loans in the past year were for people with credit scores in the 600-649 range. (Although typically the minimum score needed to qualify ranges in the 620-640 range).
The main point is that buying a home is a great investment in your future, both financially and personally. Economists agree that the number one way to begin “wealth building” for your future is through the purchase of real property, as early as you’re able. Even a small profit upon sale years down the road will provide you with a nest egg, far younger than if you were simply paying rent and working on that mound of college debt.
Before you assume you aren’t ready to buy a home, talk with a lender and learn your options. Don’t let these myths keep you from laying the foundation to a fruitful and fulfilling future!