The busy spring months have arrived, and the housing market is heating. Many home buyers are likely wondering what to expect this season and how they can come out ahead of the crowd. Start by separating the myths from the facts.
As lenders, we want consumers to feel safe and comfortable with their decision to become a homeowner. Over the years, I have discovered five common misconceptions held by those who are new to the home buying process.
You need 20 percent down to buy a home
There are many great loan programs available for people who want to buy a home. Buyers can qualify for a loan with lower down payments such as FHA, VA and state housing programs. Some programs, such as VA loans, offer zero down payments.
Fear of judgment
Some borrowers fear that a lender will judge them when they apply for a mortgage loan. Perhaps this is because they don’t fully understand the qualification process.
In reality, working with a professional mortgage lender can be a smooth and easy process. Loan Originators set clear and realistic expectations so that the process is not confusing. Our goal is to educate borrowers and empower them to make the best decision for their future.
Pre-qualification versus pre-approval
Lenders know the difference between being pre-qualified and being pre-approved for a home loan, but consumers may not. When a homebuyer is pre-qualified, he or she has provided the lender with the basic information to determine which loan program the homebuyer may qualify for. Whereas, when a homebuyer is pre-approved, the lender has collected, verified and presented the information needed for underwriting and approval.
Income determines the loan amount
Many loan applicants believe that their monthly or annual income will determine the amount of money they can borrow to purchase a home. However, debt load is also an important factor. Before choosing a loan, borrowers should stop and consider their target monthly house payment.
It is best to back into a loan and determine what you can afford to pay each month while maintaining your desired quality of life. It is also important to build unforeseen home repairs into the budget. This will help you avoid becoming “house poor.”
Interest rate differentials
There is a lot of confusion when it comes to interest rates. Many different factors determine the interest rate for each buyer. It all comes down to choosing the right loan product. Borrowers should become educated about their options in order to feel empowered to choose the loan that best fits their personal, financial and qualification needs.
Once a consumer knows the best option, they can meet with different lenders to find the best interest rate for that specific loan product. Utah buyers who can qualify for FHA loans have some additional options like USDA.
One of the most important things a lender can do is to help homebuyers feel empowered and confident. Potential homeowners can better plan for the future by “qualifying themselves” and backing into the home loan process by knowing the impact of a home payment on their finances. It is very important for a buyer to understand their personal budget and how a house payment will affect their financial situation.
Purchasing a home is one of the biggest decisions in life. A mortgage lender should be a partner and a teacher.
Dave Zitting is the Present and CEO of Primary Residential Mortgage, Inc. Follow his blog at www.davezitting.com.
- 7 common ways to get sued by your employees
- Why it might be time to upgrade your toilet
- Arizona teachers are building a better future by using technology in the classroom
- How to make summer reading fun for the whole family
- How to find relief for chronic joint pain
- Can the NBA Lottery save the Suns?
- Skip Urgent Care: 5 ailments you can treat with telemedicine
- Skin Cancer in Arizona: Stats, facts and new immunotherapy drugs making strides
- Distracted walking injuries end up not so funny
- Scary situations: 5 quick tips before you let a contractor in your home
- Four ways telemedicine is changing the health care industry
- 5 mistakes homeowners make in the spring
- Three rivers run through it: Exploring Arizona's waterways
- Smart home basics: things you need to know to get started
- 5 Surprising things causing back pain
- Arizona agriculture is a $17.1B industry
- Timeline: Arizona's roots in brewing history
- 5 reasons to love the D-backs this season
- Tips for taking your home entertainment experience to the backyard
- Tech-related injuries your parents never experienced
- Workers comp: Signs your co-worker could be a fraud
- Who's the real founder of America's pastime?
- Epidemic rising? What you need to know about Alzheimer's in Arizona
- 5 unforgettable Wooden Award winners
- Family and hard work are keys to success of modern dairy farmers
- Genetic testing could hold answers for colon cancer survival
- Cold beers and baseball: A beer lover's guide to Spring Training
- Telecommuting: 5 tips to make it work for employers and employees
- See how top CFOs feel about economic growth in the Valley
- Migraine myths that keep patients from effective treatments