4 Misconceptions Holding First-Time Home Buyers Back
In the first quarter of 2019, the U.S. Census Bureau announced the homeownership rate was at 64.2% nationwide—a number virtually unchanged from the same time last year. While some of the factors contributing to this plateau hold weight, there are a few common misconceptions holding people—especially Millennials—back from buying a home.
In reality, many of the home buying obstacles popping up in first-time buyers’ minds can be extinguished rather easily. With that said, here are the four most common misconceptions that are holding them back.
Misconception #1: Student loan debt will keep me from getting a mortgage
Oftentimes, people think that if they have student loan debt, it will stop them from getting approved for a mortgage on their new home—which holds them back from buying it. While it’s possible in some instances, you can never truly know for yourself until you speak with a mortgage lender.
Speaking with a highly qualified lender allows you to know with certainty what your options are. For example, if your student loan payments are income-based and you consistently pay them each month, you can still qualify for a home loan. FHA and government-backed loans, on the other hand, are a bit trickier to navigate and require the type of in-depth knowledge that a lender provides.
Misconception #2: I have to put a 20% down payment when buying a house
One of the most common home buying misconceptions we hear is that you have to put 20% down at close. This is absolutely false. Depending on your credit score, you can access programs that allow you to put as little as 3% down—or even lower if you are a veteran or purchasing a home in a rural area.
Consult with a mortgage lender to better understand the programs available to you. It’s our mission to find the right option to suit each individual need—a process which often overturns preconceived notions and offers maximum bang for the buck.
Misconception #3: Renting is cheaper than buying a house
It is always a better investment to purchase a home instead of renting. While the price of buying a home can certainly look intimidating, renting can cost you significantly more. This is because rental homes and apartments don’t give you anything in return for the cost. Owning a home and paying a mortgage, however, gives you equity in a property you can sell later, as well as a tangible physical asset—both adding to your net worth.
The housing market is still very strong, and home appreciation continues to grow consistently and substantially, albeit at a slower pace than in recent years. Additionally, interest rates remain low, often making it cheaper to pay a mortgage each month than a rental payment.
Misconception #4: There are no good starter homes in the cities I’m searching in
Searching for a home in a particularly trendy area can often price first-time buyers out of moving forward in the process. While it’s true there is a shortage of starter homes in some cities, if your alternative is renting, it’s often best to expand your list to include other towns in the region. Opening up your search can uncover hidden treasures you never considered, like great, once-unknown neighborhoods and dream homes at better values.
Before you talk with a realtor, the first conversations you should have to start the home buying process is with a mortgage lender. They will let you know exactly how much house you can afford, potentially allowing you to search in neighborhoods previously unconsidered.
Don’t get held back any longer! Ross Mortgage can help make your dream home a reality. Send us a message, and we’ll be happy to provide you with expert guidance!