“Greetings from hot and sunny southern Georgia! Just walking to the car today is an effort, and staying hydrated is CRITICAL in this weather.
Trying to learn how to stay as hydrated as possible during the hot weather, I read an article about the myths of hydration and the problem with drinking too much water. (see links below)
I was startled by the things that I thought were true about staying hydrated and it made me think of other myths that I encounter in my business. And I think that no other clientele suffer from home buying myths than the first time home buyer.
The most prevalent myth that I encounter is that you have to find a home first before you do anything else. There are so many problems with this approach. First, you should talk to a mortgage lender and find obtain a pre-qualification letter. While the lender can tailor the letter towards your planned spending range, a good lender will do the research into your finances and be able to tell you with confidence if they can get your loan approved. Alternatively, an honest lender will tell you what steps that you need to take to improve your finances (e.g. improve your credit by paying down charge cards, lower your debt to income ratio, DTI, etc) in order to qualify for a loan.
I’ve had so many clients approach me with their hearts set on a home, one that they’ve already shown their children and posted photos of on Facebook, one that they’ve researched the schools and shopping nearby, only to them find out that they’re not eligible for that home, or even any home in that area. It’s heartbreaking!
Speaking to a good lender first will set you up for success and help prevent major disappointments along the way. I’ll even let you in on a secret: Some of my top realtors won’t even show you a home without a prequel letter (or at least a phone call from me telling them that you’re a viable client). This protects not only my time but also yours.
The next myth that you have to go to a bank or a credit union to apply for a loan. NOT TRUE! There are numerous lending companies and you must do the research to find what’s right for you. Maybe your bank offers a great rate or has a rebate program, but I’ve had countless fliers referred to me because of the poor customer service that they’ve received from their bank. At Fairway Mortgage we pride ourselves on customer service, and offer the same loan products as any bank (sometimes even more). Do the research on different lenders, look at not only rate but also customer service. Talk to your friends and colleagues about their experiences and who they might recommend.
And during your research, don’t forget to ask about closing costs! This is another myth that I hear all to often, that the only thing you need for your mortgage is your down payment. Even if your credit and DTI qualify you, you have to have the necessary funds to pay your closing costs. Depending on the loan product you use (e.g. Conventional, VA, FHA, etc.), your down payment varies. On top of this you must pay for inspections, assessments, property taxes and insurance for escrow, as well as other fees. These may add up to 4-6% of the selling price or the home! Some people think that you can roll all of these costs into your mortgage, but while you can generally roll some costs into your loan, you annoy roll all. Plus doing this will also raise your interest rate as your lender buys points in exchange for paying some of your costs.
On the subject of loan programs, don’t let ANYONE sell you on a particular program without them explaining the details of WHY they’re offering that program. I’ve had some veterans who qualify for 100% finances VA loan but a conventional loan may actually be a better product depending on their specific circumstances.
Another great government financing option that includes 0 down payment is the USDA loan. Many customers think that because they don’t live in what they consider a “rural” area that they don’t qualify for a USDA loan (to be honest, most customer that I meet don’t even realize that the Department of Agricultural offers home loans, but I’m going to write a blog about that next week). Where I live in the houyhern Georgia/northeast Florida region, entire counties are designated as rural, even if they’re teeming with shopping centers, movie theaters and businesses. USDA loans might be your key to getting the home of your dreams.
There are many other myths that first time home buyers encounter. I’ve explained a few, and I’ll blog again soon on other myths. The bottom line: speak to a good lender and get all the information that you need to keep from falling into these traps.
President Kennedy once said: “The great enemy of truth is very often not the lie–deliberate, contrived and dishonest–but the myth–persistent, persuasive and unrealistic.”
Call me at Fairway St Mary’s (912-227-2447) and I’ll make sure that you get the straight story and help you get your dream home today!
YOUR MORTGAGE LOAN TRANSACTION WILL BE CONDUCTED IN ENGLISH. All the information you receive, such as the estimate of costs (the Loan Estimate), and the official documents you will sign, such as the Loan Application, Mortgage and Note will be in English. SU TRANSACCIÓN DE PRÉSTAMO HIPOTECARIO SE LLEVARÁ A CABO EN INGLÉS. Toda la información que reciba, como la estimación de los costos (Estimación de préstamo), y los documentos oficiales que firmará, como la solicitud de préstamo, la hipoteca y la nota estarán en inglés.