It’s not true that you can’t buy a house if you’ve got a few problems with your credit. If you believe that you have to pay your mortgage off as soon as possible, or other similar beliefs, you may be subscribing to mortgage myths that might cost you more money.
Fixed-rate mortgages are best
Fixed-rate mortgages that last 15-30 years are only the best if you intend to live in your house forever. Research shows that the average homeowner only spends nine years in their house. First-time home buyers tend to buy starter homes and move to bigger ones as their family grows. If you know you’re going to stay in your house for only several years, it’s probably better if you get an adjustable rate mortgage that will last three, five or ten years.
Pay your mortgage as soon as possible
It’s good to pay off your mortgage early if you’re trying to satisfy a long-term financial goal and retire without any debts. But there are some instances where your money should go into paying off higher-interest debts like auto loans or credit card bills. It would also be a good idea to invest your money into something that will generate greater returns, then pay your mortgage after taxes.
You must give a down payment of 10% or 20%
This is not always true. There are a lot of mortgage lenders who only ask for a 5% down payment or less for those who cannot afford to give more.
A bad credit record means no mortgage
Lenders always find ways to help out people who have bad records. The term “subprime” refers to a loan for people who have serious credit problems that demand a higher loan rate. Those who have had a house repossessed or have gone bankrupt usually fall under the subprime category. However, there are lending agencies that also cater to subprime borrowers and analyze their credit record so the borrower doesn’t have to pay more than he or she should.