First-time home buyers
Don’t let these mortgage myths stop you from making your move
As “For Sale” signs pop up like crocuses, the home-buying season bursts into full bloom. But too often, mortgage myths dissuade potential first-time home buyers from taking that step from renting to owning. Don’t let these six misconceptions stop you from moving forward.
Myth 1. You need a 20% down payment.
That used to be the case. But today, some mortgage programs require as little as 3% down. Certain programs offered by the state may even offer 100% financing. So be sure to talk to a professional about what’s possible for you.
Myth 2. You need a substantial credit history.
You haven’t yet built a solid credit score by conventional measurements? Don’t let that stop you. Today, some lenders will consider non-traditional credit sources — like your utility payments, rent and cell phone bills.
Myth 3. A mortgage is a mortgage is a mortgage.
Not all mortgages — or mortgage lenders — are the same. For example, lenders that understand the specific rules in your state may have tailored programs to better serve your area. Different lenders may also present the details differently. So make sure you’re comparing apples to apples.
Myth 4. A low mortgage rate is all that matters.
The rate is just part of the story. Some advertised rates may not take into account factors that can increase your costs — such as when a lender increases your closing costs based on property type, loan-to-value, and your credit score, for example. Others may not actually reflect your specific situation — for example, assuming you’re making that not-always-necessary 20% down payment.
Myth 5. All lenders offer mortgages insured by the Federal Housing Administration (FHA).
This is definitely not true. And as a first-time home buyer, you may need the advantages of an FHA-backed loan. These types of mortgages enable borrowers to put less money down. Often, they don’t require a credit score as high as a lender might typically require. Because the federal government insures the lender in case the borrower defaults, lenders who can offer FHA-backed loans may be able to be more flexible.
Myth 6. You need a raft of paperwork to get started.
At your first meeting with a lender, you don’t need to bring pay stubs, W2 forms, tax returns, or bank statements. Thanks to Truth in Lending laws, you can’t be required to provide that information until you actually apply for a mortgage. Just jot down your income for the past few years, your checking and savings balances, and some idea of your debt. You won’t need to talk specifics until you’re ready to talk turkey.
Bottom line: one hour with a mortgage banker can save you days of confusion.
Especially for first-time home buyers, the tidal wave of mortgage facts and figures can be daunting. That’s why we recommend talking to a mortgage banker to zero in on the plan that’s uniquely right for you.
Webster Bank can help. We’re a major player across the region, with $4 billion in mortgage loans on the books, and another $2 billion administered for Fannie Mae, the federal mortgage loan program. Webster Bank tops the list in single-family purchase loans.
Just as important, mortgage lending is deep in our bank’s DNA. Harold Webster Smith founded Webster Bank during the Depression to help neighbors stay in their homes. He delivered the very first home loan right to the customer’s doorstep.
More than eighty years later, that level of personal service is still our great strength—and the kind of help that’s invaluable to first-time home buyers. Take your first steps toward home ownership now by connecting with a Webster mortgage banker at 877-647-5137.
All lines and loans are subject to credit approval.
Source: The Best Mortgage Lenders of 2018, May 1, 2018, US News and World Report