Don't think you can afford to own your own home? Not so fast. There are plenty of people out there who want to buy a home but go into a panic after looking over their finances. So you're definitely not alone.
If there's one thing our REALTORS® believe, it's that home ownership should be within everyone's reach. Watch out for these common myths that keep people from becoming homeowners, and remember not to let them stop you!
- You can't afford the down payment
Worrying about saving for a down payment is one factor that keeps a lot of people from buying a home. It's usually recommended that you pay 20 percent of the home's value upfront, but let's face it—20 percent of even a low-priced home is quite a big chunk of change.
Fortunately, it's possible to buy a home with a smaller down payment, and according to the National Association of REALTORS®, 81 percent of American homeowners do just that. The downside of making a smaller down payment is that you end up with a bigger mortgage (and more interest in the long run), but for a lot of new homeowners that's a very worthwhile trade-off.
- Your credit is too low
It's easy to get stressed out about your credit score. After all, it's one of the significant factors that lenders use to decide whether they will offer you a mortgage. But low credit doesn't necessarily disqualify you from a mortgage—more on that in a minute—and there are many steps you can take to improve your credit.
The best thing to do if you have bad credit is to get to work on improving it. Lenders will notice the improvement. Work on paying back any debts you have, and stay on top of keeping bills current. Avoid incurring any new debt, and don't open up any new lines of credit. Most importantly, work on improving your credit utilization, which is the ratio between the amount you owe, and the amount of available credit you have.
- You can't afford a mortgage
A lot of first-time homeowners fear that even if they do manage to qualify for a mortgage, they won't be able to afford the interest or keep up with monthly payments. It's smart to be wary of taking out a major loan, and it's never advisable to buy a house that you can't truly afford. Still, there are several mortgage options available for low-income individuals, as well as those with low credit, which may be worth considering:
- FHA loans: Backed by the Federal Housing Authority, FHA loans are intended to open up homeownership to borrowers who can't make a sizeable down payment, or have less-than-perfect credit. You'll need a minimum credit score of 580 to get 3.5 percent financing, but a score of 500 is accepted if you can put at least 10 percent down.
- VA loans: These flexible low-interest loans are available to members of the U.S. military, veterans, and their families; and they do not require a down payment or private mortgage insurance.
- USDA loans: Many mid-range borrowers can buy homes in certain areas using USDA loans. You need to meet income limits to qualify, but eligible borrowers may not be required to make a down payment.
If you're looking for your dream home among the many available Southport homes for sale, don't be held back by myths that say you can't afford it. Contact us today to learn more about how we can help make your dream of homeownership a reality.