First-time homebuyers are often intimidated with home loans. While it is true that it is a complicated and lengthy legal process - it is not impossible to get approved for a home loan as long as you have the minimum requirements set by lenders.
Some of the things that stop potential homebuyers from applying for a mortgage are myths that circulate around us. To set some records straight, we are here to debunk some of the most common mortgage myths. Better get your notes ready get ready to be informed.
Getting Pre-approved Is The Same As Getting Pre-qualified.
A pre-qualification and pre-approval may tell you how much the maximum loan your lender can offer you, but these two are not the same thing. In pre-qualification, lenders will only review the data you gave them, and you can get the results after a few minutes. As for pre-approval, they will verify the documents you will be providing to make sure you're qualified for the loan.
A Perfect Credit Is Needed To Qualify For A Home Loan.
You don't need to have a stellar credit to get approved for credit union mortgage or Mortgage Loans Midland. While some mortgage programs will require you to have a good credit score, some lenders accept borrowers with a score of 580 or lower. You also have the option to pay a bigger down payment or get yourself a cosigner if you don't qualify for a mortgage.
You Need To Be Debt-Free To Get Approved For Mortgage.
Mortgage lenders have a specific DTI ratio requirement for their borrowers. You don't necessarily need to have zero debts under your name to qualify. It just needs to be within their DTI ratio requirement for you to qualify.
You Can't Buy A House If You Have Student Loans.
While a considerable number of the population in the US have student loans, it shouldn't hinder your ability to qualify for a mortgage. Thanks to government-sponsored agencies, you can now fulfill your dream of owning your own house with affordable mortgage programs made available nowadays.
Recommended Read: Here's How To Buy A House When You Have Student Loan Debt
You Need To Save At Least 20% Down Payment.
Before, 20% down payment is the gold standard when making a home purchase. Nowadays, you can buy a house even if you can only afford less than 20% down payment. There are also mortgage programs that don't require any down payment at all. However, if you can, prepare 20% down to avoid Private Mortgage Insurance fees.
Filing For A Bankruptcy Can Ruin May Chance Of Buying A House.
When you file bankruptcy, this allows you to have a fresh start and eliminate some of your debts. However, there is a waiting period before you can apply for a mortgage after filing for bankruptcy. While this means you need to wait at least one to four years before you can buy a house, you can still qualify as long as you improve your score and build a healthy credit history.
Don't be fooled by outdated and incorrect mortgage information. Do your research, ask your lender and seek professional advice before believing any mortgage myths. Also, don't forget the list above to keep yourself informed and educated with some of the most common myths surrounding mortgages.