People love to give advice based on their personal experience. It can be hard to tell which advice is valuable and which should just be ignored. Often, the advice is inaccurate or simply a myth. Here are some myths you may have heard while buying your first home and the realities of the process.
Myth : You can start looking in May and be moved in by August.
Reality : Although you may be aiming to move before the school year starts you shouldn’t set an unattainable timeline. According to the National Associations of Realtors the average home search takes 12 weeks. At this point your offer may be accepted but the processing of the mortgage paperwork is also a significant time period, often 90 to 120 days. So you may be looking at an 8-month time frame but keep in mind that each individual situation varies. Some people will find their dream home relatively quickly and others will be looking for over a year. You don’t want to be rushed so try to go month to month on your lease to allow yourself the time you need to find and purchase a home you desire. Do your research relative to your market.
Myth : Don’t bother looking if your credit score isn’t strong.
Reality : Many people will tell you that a bad credit score means you won’t be able to buy a home. Don’t give up hope. At 1st Alliance Lending we believe you are more than a three-digit number. We want to understand your story and why your credit score is what it is. We understand that some people face unfortunate circumstances that are out of their control. We look at the whole picture and let you know if we think you are ready for a mortgage. If not, we will let you know what steps you should take to get ready.
Myth : Always choose the lowest interest rate option.
Reality : When you are buying a home you will likely be presented with a few mortgage options. The interest rate will vary with the different options, depending on the length of the loan (15, 20 or 30 years) and the type of loan (adjustable rate mortgage vs. fixed). Obviously you need to select a mortgage payment you can afford. The shorter the loan, the higher the monthly payment will be. The interest rate will be lower but if you aren’t comfortable you can afford the monthly payment then go with the slightly higher interest rate. An adjustable rate mortgage may appear better than a fixed mortgage today but keep in mind that the rate will change with the market. Many people are more comfortable having consistent mortgage payments for the entire length of the loan as provided by a fixed mortgage. You have to choose the mortgage that you can afford now and long term regardless of the interest rate. Remember – time is money.
At 1st Alliance Lending we partner with homebuyers to help them through the process. We frequently work with first time homebuyers and can help you determine what is myth and what is reality in the home buying process. Contact us for more information.