Are you one of those aspiring homeowners that are worried about not being able to qualify for a home loan? Applying for a home loan is a serious undertaking that it’s common for most people to be concerned about the application process. However, should you be that concerned? Here are some of the most common fears related to taking out a mortgage and why you shouldn’t be afraid of them.
Why Apply If My Credit Score is No Good?
Although it’s true that having a less-than-stellar credit score won’t work in your favor, you don’t necessarily have to have a perfect score either. Likewise, you should know that Freddie Mac and Fannie Mae usually require a 620 score, which is a relatively attainable target score, adds an experienced mortgage broker in Sandy. You could likewise look into looking into loans offered by the FHA, USDA, and Veterans Affairs, which require lower credit scores ranging from 500 to 580.
I Can’t Put Down a 20% Down Payment
Although many lenders require a down payment of 20%, some would be willing to work with you for less. However, you would need also to purchase private mortgage insurance or PMI and get a higher interest rate. But you could secure a mortgage and build equity in your home, provided that you always pay your monthly payments on time. Additionally, loans by the FHA, VA, and USDA require very low to no down payment at all.
Owning a House is More Costly Than Renting
While renting doesn’t come with home equity, it also doesn’t come with major repairs and property taxes. With this in mind, owning your own home does not necessarily have to be more expensive than renting. When you’re a homeowner, you could deduct qualified expenses such as property taxes and mortgage interest. Additionally, if you have a home office, you could qualify for the home office deduction.
There’s no doubt that taking out a home loan is a huge step and could be quite scary. But as you could see from above, being prepared and educating yourself on the process could help increase your chances of securing a mortgage that’s right for your needs.