HOMEBUYING MYTHS INCLUDE PREQUALIFIED ASSURANCES, DOWN-PAYMENT REQUIREMENTS
Q: Obtaining a prequalification letter from a vendor is one of the first tasks many homebuyers do. Does preapproval guarantee a loan?
A: Not always. There are a number of occurrences that can take place after receiving a prequalification letter that may cause a dramatic shift in your credit such as buying a car, running numerous credit reports and more. Always be sure to watch expenditures while trying to buy a home and continually monitor credit.
Q: Do homebuyers have to put down 20 percent of the home’s purchase price to obtain a mortgage? A: This is a common thought among homebuyers and may have been true at one time but today, about 66 percent of home buyers put less than 6 percent down. There are a number of options including Federal Housing Administration loans with a down payment as little as 3.5 percent for a credit score of 580 or higher, Veterans Administration loans for U.S. veterans and U.S. Department of Agriculture loans for rural property owners.
Q: Will a lower credit score prevent individuals from buying a home?
A: If buyers have a lower credit score, a higher down payment may be required. Another common option is having a loan co-signer. As a long-term solution, repair credit by setting goals and keeping track of credit reports. While searching for a new home, it’s important to consistently monitor credit reports.