Some first-time homebuyers feel intimidated by the steps needed to start owning and stop renting. Is my credit good enough? Do I make enough money? How do I even find the home I want?
Do you feel uncertainty holds you back from owning the home of your dreams? Ain’t nobody got time for that! Many of the home buying preconceptions you have heard probably aren’t even true! Read along as we put five common homebuying myths to rest.
Myth 1: “I need perfect credit!"
Yes, the best mortgage rates are available to those with high credit scores. Does this mean you cannot buy a new home without that ideal 800 credit score? Not one bit!
Credit is just one piece of the pie when getting approved for a mortgage. The average FICO credit score in Florida is 706 according to Experian, and our lender partners are able to work with clients who even have below-average credit scores by factoring in other criteria such as income and assets.
Each loan program has differing credit score and qualifying criteria, with some offering eligibility even for those with scores of just 620. Our lender partners can help you determine your purchasing power and find the right mortgage, as well as answer your credit and mortgage finance questions. And, if your credit is not quite where it needs to be to qualify, we work with a credit restoration specialist who can help you improve your credit, and your future.
Pre-qualify online with one of our lender partners today to learn more about your personal credit and buying power, and stop doubting yourself!
Myth 2: “I need to have 20% down!"
Good news - you don’t need 20% down! This is probably the largest myth in home buying. Down payments vary by loan type and average much less than people think — in fact, we offer loan programs through our lender partners which have low or no down payment required, meaning you can purchase your dream home with your only upfront, out of pocket cost being your earnest money deposit.
While having a large down payment does lower your monthly mortgage payment by a couple of dollars, handing over 20% for a new home is uncommon and, for most, unreasonable. According to a study conducted in 2021 by the National Association of Realtors, the median down payment for first-time homebuyers was just 6%, with all homebuyers surveyed putting a median of 12% down. Here in Florida, our homeowners favor the FHA loan, which requires just a 3.5% down payment, or a 5% down Conventional loan.
The average down payment hasn’t been around 20% since the Silent Generation (the 1920s-1940s). The average home in 1950 cost less than $8,500, meaning Grandma put $1,700 or less down on a brand-new home (and only paid 18-cents for a gallon of gas).
Myth 3: “My student loan debt makes owning a new home impossible!"
No one likes looking into their financial summary and seeing negatives that add up to tens of thousands of dollars. You’re not alone in the war against student loans - The average student loan debt in Florida is nearly $35,000. Though this may be discouraging, student loan debt does not necessarily stop you from owning a home.
One of the factors used in mortgage qualification is your monthly debt to income ratio, also known as DTI. The front-end DTI compares your income to your new monthly housing payment, while the back-end DTI compares your income to the combination of your new housing payment and your other monthly bills.
If you don't have a lot of other monthly bills, you may be just fine. Or, consider how to lower your monthly student loan payments such as enrolling in an income-based repayment plan, extending your repayment terms, and refinancing or consolidating your student loans. Keeping your other monthly debts as low as possible also gives you a better chance of getting qualified for a loan. So, that means don’t charge up credit cards, buy a new car, or sign up for any additional debt if you are considering a house purchase. Again, talking to a mortgage lender will give you a better idea of your overall buying power.
Myth 4: “Renting is the least expensive option!"
Renting a home will never be less expensive than owning a home in the long run. Let’s face it — you are paying a mortgage whether that’s for your own home or the mortgage of your landlord. The median rent in Tampa has skyrocketed to over $2000 per month!! Meanwhile, you can OWN your very own home for several hundred dollars LESS every single month. In addition, when you own a home, you can take advantage of tax benefits which will help you save or get money back on your tax returns each year.
When renting, you’re basically paying someone else’s bills and raising someone else’s equity! Home equity is the part of the property value that you as a homeowner own outright, and equity increases with every payment you make. Owning a home means having your own increasing equity and collateral which you can use to refinance your mortgage, fund major purchases, or just save for the future.
Myth 5: “I’ll save time and money buying an older home!"
Buying an older home is, for most, a bad investment. You’ll end up paying way too much trying to repair old construction and renovate rooms. Old homes can have unseen issues, such as mold spores, termites and infestations, and collapsing foundations. They are less energy-efficient, which means you'll pay higher utility bills every month. And, older homes have outdated layouts and style, and are often in less desirable neighborhoods.
New homes will save you money, as well as time and energy. With a newer home, there is no need for renovation because you’ve chosen the home plan, and in many cases, the design options to personalize every room in your home. Everything is brand-new and protected by a warranty, so you do not have to worry about finding the money to repair or replace things that break. Your must-have design features, such as an open layout or high-performance appliances, are already built-in. And, energy-efficient features found in new construction homes, from technologically-advanced HVAC equipment and appliances to insulation and windows, can save you more than $1,000 every year on your utiltiy bills.
Your first step towards homeownership
There is no need to feel intimidated by the home buying process! Before doubting yourself, take the time to speak with professionals and ask questions that may have been daunting you! Our new homes in Tampa, Orlando, Lakeland, East Polk County, the Bradenton area, Ocala, and throughout Central Florida are affordably priced with a variety of desirable communities, home sizes, and layouts for you to choose from. To find your new home designed for your life, and get your home buying questions answered, contact our Florida New Home Specialists by calling or emailing us today!
Tags: Credit score Down payment Get pre-qualified Home buying 101 Mortgage Tax benefits of homeownership Benefits of new construction First time homebuyer info Rent vs own
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