Homes are too expensive. I’ll never get approved for a loan. It’s better to wait for a drop in interest rates. These are some things that would-be homeowners tell themselves. But let’s separate these myths from the reality of buying a home.
Myth 1: You Need a 20% Down Payment
It’s a common belief. A National Association of Realtors (NAR) survey found that 45% of consumers think they must put down as much as 20% and higher. But, according to the NAR, the average first-time buyer puts down around 7%. Borrowers can put 3.5% down with an FHA loan and some VA loans need no down payments.
No matter how much you wish to put down, this down payment money does not necessarily have to originate from the borrower. About 28% of borrowers use gift money from friends or relatives.
Myth 2: Your Credit Score Isn’t Good Enough
No lender expects perfection in a borrower. Several home financing options, including FHA loans, require a minimum credit score of 600. And there are ways to improve credit fast. One can increase a credit score by as much as 100 points. How? Strategic credit card payments, increasing one’s credit limit, and disputing credit reports are just a few ways.
Myth 3: Interest Rates Are Too High Right Now
Some facts have contributed to this myth. In 2020 and 2021, the U.S. had the lowest mortgage rates in its history. This unprecedented freefall wasn’t sustainable. And so current rates reflect a return to normalcy. According to Freddie Mac, between April 1971 and June 2023, the average 30-year fixed-rate mortgage was 7.74%. Today’s average mortgage rates are lower than the historical average. Most financial experts predict only marginal shifts in the near future.
Myth 4: You Will Pay More Than the List Price
This may be true in some markets. In the DFW home market, it’s a myth. According to Redfin, most homes in the DFW area sell for just below their asking price. Redfin says average homes in the Dallas area sell for about 1% below list price. Some properties, which Redfin identifies as “hot homes” with multiple offers, sell for about 2% above the list price.
Are you ready to stop believing in myths and embrace the reality of becoming a homeowner? We’re ready with the financing to make that happen! Contact one of our loan experts online or call us at (972) 591-3097.