These are a few common myths about buying a property. See how these common myths are debunked!
1.MYTH: I need 20% down buy a property
TRUTH: You don’t need 20% down to purchase! FHA is 3.5% down and MassHousing is 5% down. Consider multiple programs when looking for a loan on your property. Is is best for you to put 20% down or low money down? Keep in mind, with FHA you will be paying PMI (Private Mortgage Insurance) for the life of the loan. You do have the option to refinance later to rid the PMI.
2. MYTH: I need an excellent credit score to buy a home
TRUTH: For the better lending opportunities, your score should be above 700. You can still purchase a home with a 600 credit score. Also, consider improving your credit score before being ready to make your purchase. If necessary, consider paying down debts for a period of time to improve your debt to income ratio.
3. MYTH: I need to earn lots of money to buy a home
TRUTH: The more you make, the more you can typically afford. Better housing options may be available with higher incomes but you can still find a great house with your current income. A way to increase your buying power is consider purchasing a multi family and living in one of the units. You can afford a much larger mortgage payment since the additional floors count as income for you.
4. MYTH:I should spend the maximum amount I am approved for
TRUTH: This will depend on your current situation. Your pre approval will give you the maximum amount to purchase a property. Looking at an amortization table may be helpful so you can see the payments over time. Initially, you are paying heavy interest upfront, and this decreases over time.
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