Whether you’ve purchased several homes or are a first-time buyer, the home buying process can be stressful. You don’t need more stress from these common myths:

Myth #1: You need a 20% down payment.

Not everyone can realistically afford 20% down or save at a rate that keeps up with rising home prices. Many lenders offer piggy-back loans in which borrowers can get a second loan to cover part of the down payment. While this second loan may come with a higher interest rate, it allows the buyer to avoid paying private mortgage insurance, which often comes with low down payment FHA loans.

Myth #2: You need perfect credit.

Most people assume that you must have absolutely golden credit in order to get a loan, but that just simply isn’t the case. If buyers have less than perfect credit, lenders are often willing to work with them to get the best possible loan.

Myth #3: A 30-year fixed mortgage is always the best deal.

If you only intend to keep the home for 5-7 years, a fixed rate for 7 years could be more appropriate. The longer you fix the rate, the higher your interest rate will be so you could be paying a higher rate for nothing.

Myth #4: The bigger the downpayment, the better off you’ll be.

Buyers’ immediate reflex is to put as much cash down as they can when buying a new home because they’ll borrow less and lower the monthly mortgage payments. However, in general at today’s interest rates putting an extra $10,000 down will only lower the monthly payment by about $50.

Myth #5: You need your own money for your down payment.

There are a host of programs that offer assistance, primarily for first-time home buyers with low to moderate income. You can also see if you can borrow from family members. You may be able to take a loan from your employer’s retirement plan, perhaps for a longer repayment period for a home purchase, but you may lose potential earnings on the money you borrow.

Myth #6: Always choose the lender with the lowest rate.

In fact, the difference in settlement fees may matter more. In addition, mortgage lenders aren’t just a commodity. In a competitive buying market like D.C., the reliability of your lender could mean the difference between getting your dream home and losing to another offer so go with a reliable lender.

If you have questions, we can answer them and help you buy a home. Contact Walker Team Realtors!