Cheers to Homeownership Month

By MSM Luxury Estates

July 6, 2017

Cheers to Homeownership month! As we celebrate this significant time, this June MSM Luxury Estates would like to guide “homeowners-to-be” through one of the largest financial decisions they will ever make – a decision to buy a home!

Once the idea of owning your own property enters your mind, you will most likely share your ideas with your nearest friends and relatives, and will research the internet until the wee hours of the night! With so many opinions and research, you might stumble upon some common homeownership misunderstandings that might take you on the wrong path. But don’t worry, we have your back!

In our many years of working with buyers, we noticed an underlying theme of misconceptions about buying real estate that was so strongly believed that it would prevent buyers from even trying to buy their own home. Those misconceptions, or myths, were proven wrong to new (and very happy) homeowners!

YOU too can be on your way to a home you can call your own. Let’s clarify some of the most common myths that will help you when making a decision to buy:

MYTH #1: YOU NEED PERFECT CREDIT TO PURCHASE A HOME

FACT: These days there are a lot of mortgage loan program options available that allow for less-than-perfect credit. Usually, the better your credit, the better the interest rate you’ll get, but FHA loans have some of the lowest credit score requirements, at 580. The minimum credit score required to receive a loan depends in large part on the type of loan you’re considering.

MYTH #2: YOU NEED TO PUT 20% DOWN TO BUY A HOME.

FACT: There are many types of home loans that offer low down payment options – as low as 1% down*! Usually, 20% down is recommended only because putting down less will make you shell out money for private mortgage insurance. Mortgage insurance protects the lender in case you can’t make your payments and the house is foreclosed on. Fortunately, PMI payments don’t last forever. Once your loan-to-value ratio is 80 percent, you can ask the lender if you can stop paying PMI.

MYTH #3: IF YOU’RE LATE ON YOUR LOAN PAYMENTS, YOU’LL LOSE YOUR HOME

FACT: Being late on one loan payment isn’t going to cause you to lose your home. If you have a financial hardship and are going to be more than 30 days late, always call your lender so that they can work with you and help you to the best of their ability. With a variety of government-sponsored programs available to assist you in keeping your home and your good credit score, you are protected from losing your home.

MYTH #4: YOU CAN’T GET A HOME LOAN IF YOU’VE CHANGED JOBS IN THE LAST FEW YEARS

FACT: It’s more important that you’ve had stable employment rather than being in your current job for a specific time. As long as your current job does not have a termination date, most lenders consider your employment to be permanent and ongoing.

MYTH #5: IF YOU DON’T HAVE A BANK ACCOUNT OR CREDIT, YOU CAN’T PURCHASE A HOME

FACT: Having a bank account is always a good idea and it does help you to establish credit. There are some loan programs that don’t require a borrower to have a bank account. Credit is important in obtaining a loan. Non-traditional credit references that reflect your timely payment from your rent, utilities, or car payment may be used for some loans.

MYTH #6: YOU MUST BE A US CITIZEN TO PURCHASE A HOME

FACT: Below are 4 categories that are able to obtain mortgage in state of California:

US Citizens: Limited only by qualification criteria (income, assets, credit and collateral). All programs, loan-to-values (LTVs) accessible.

Permanent resident aliens (green card): As with citizens, must have sufficient US history on credit qualifying characteristics but otherwise, terms very similar to US citizens.

Non-permanent resident aliens: Social security number and US tax and credit history, terms can be equivalent to above two classes. Without sufficient tax and credit history, mortgage financing still available but at more conservative LTVs (60% in most cases).

Foreign national: Does not have a US social security number and is a citizen of a foreign country. Financing available up to 60% of home’s value — must be a second or investment home and documentation can be provided from country of origin.

MYTH #7: YOU DON’T NEED A REAL ESTATE AGENT

You can find information about available homes on websites, but not the experience needed for real estate transactions. Your real estate agent offers a great number of advantages. Being represented by an agent, means that you have a guide who understands your purchase needs, has access to properties that aren’t listed, has experience negotiating real estate transactions, which will become an essential part of your purchase process, understands the contract, inspections, escrow, title and financing processes, etc. Shall we continue? For a buyer, using a real estate agent shouldn’t cost you anything ― the agent’s commission comes out of the sale proceeds and it’s usually paid by the seller.

Now, do you feel better about taking the first step in buying your first home? Contact us and find out how smooth buying you’re a property can be when using an experienced realtor!

MSM Luxury Estates | 310.402.2258