These common misconceptions could be standing in your way:
1. Don’t assume you can’t afford to buy a house.
Monthly rents keep rising. While requirements need to be met in order to qualify for a mortgage, you might be able to secure a monthly mortgage payment for the same—or even less than—what you’re paying in monthly rent. Try our handy rent vs. buy calculator to see how much house you might afford for the same amount.
Better yet, reach out to your local Academy Loan Officer and crunch the numbers. It’s true that there’s more to homeownership than just a monthly mortgage payment. You’ll also be responsible for lawn and home maintenance, property taxes, HOA dues, and more. Your Loan Officer can help you work through your housing budget and account for these added costs.
2. Don’t put off getting pre-approved*.
Though the housing market has cooled, it’s still important to get pre-approved* before you start hunting. Why?
- Getting pre-approved* for a loan means that you can shop with confidence in your buying power.
- Once you find out how much house you can afford to buy, you can begin hunting for a home in your price range.
Once you find a home you want to put an offer on, you won’t be wasting your time or the time of the seller. Your dream home is less likely to slip away if you already know that you’re pre-approved* to purchase it.
3. Don’t assume you need a big down payment.
A 20 percent down payment can appear monumental when preparing to buy your first house, but take heart:
- The typical down payment for first-time homebuyers has dropped to just 6 percent.
- Not only that, but there are a variety of low and no down payment mortgages available.
- Other options for gathering the funds to cover your down payment include down payment assistance programs, which you can learn more about here.
With this in mind, don’t go with just any lender. As a first-time buyer, you want to choose a mortgage lender that offers the types of loans you’re looking for. From FHA to VA Loans, Academy Mortgage proudly provides numerous loan programs that can help put homeownership in reach for first-time buyers. And because we have one of the largest loan product portfolios in the industry, many of these loans can be customized to you.
Interested in building a home? Looking for a low down payment? Hoping to live outside city limits?
Use our loan decision tool to find the mortgage that’s right for your unique situation.
4. Don’t get too hung up on the rate.
Higher mortgage rates can put off many first-time homebuyers. But workarounds exist. One example is using a Temporary Buydown to lower your interest rate for the first few years of homeownership. Another is starting out with an Adjustable-Rate Mortgage and then refinancing if mortgage rates decrease in the future. Your Loan Officer can explain the pros and cons, and help you weigh your options.
5. Don’t drain your savings.
Even with the protection of a home inspection, many new homeowners still face unexpected repairs a few years (or months) down the line. No one can predict when a water heater will go out, or when a storm will knock down a fence. To comfortably deal with these issues, it’s recommended to save anywhere from 1 to 4 percent of your home’s value each year to cover repairs and maintenance.
6. Don’t make a big purchase right before buying.
If you’re thinking about buying a new car before you buy a house—hold off. Save it until your loan is complete. Big purchases right before you buy a house can negatively impact your home loan. After your closing has been completed, then you can reconsider that vehicle purchase.
7. Don’t open a new credit account either.
It’s best to avoid making any credit moves, like opening a new card, in the window of time from pre-approval* to closing on your mortgage. This is because the amount that a lender decides to loan you is based on your credit score and DTI (debt-to-income ratio). Taking out a new line of credit may slightly decrease your credit score, while increasing your DTI.
A lender will do a final credit pull prior to closing. If your credit score and DTI have changed, this could affect (and even nullify) the mortgage terms you’ve qualified for. Changes this late in the game are also likely to cause closing delays.
8. Don’t forget to ask for seller concessions.
Another benefit to the housing market being less competitive is that more sellers are willing to negotiate. But you won’t know until you ask. These days, a seller may agree to pay some or all of your closing costs, helping to reduce the upfront cash needed to purchase. Ask your real estate agent about whether sellers are accepting concessions in your market.