At Loan Pronto we LOVE working with first time home buyers and educating them on all things mortgage! Most young people don’t even consider buying a home until they are in their 30’s because they think they are “too young.” Today we’re going to debunk those misconceptions.
The three misconceptions we hear the most are….
1. “Owning is more expensive than renting”
The average rent for an apartment in Nashville, TN is $1,405. Charlotte, NC comes in at $1,350, and an apartment in Denver, CO will set you back almost $1,700 a month. The principle and interest payment on a $200,000 loan at a 4% interest rate is less than $1,000! $955 to be exact. Don’t be afraid to reach out and see how much you can get pre-approved for, because you would be shocked at how affordable owning a home is! Also remember that when you rent you aren’t building any equity and don’t get any return on your investment.
2. “I don’t have enough money for a down payment”
We hear this ALL THE TIME. It’s one of the biggest myths in the mortgage industry. Although it is preferred, you do not have to have a 20% down payment to purchase a home! FHA loan programs only require borrowers to put 3.5% down on a home. The key here is to figure out how much money you are comfortable putting down on a home while making sure you still leaving enough money in your savings as a safety net.
3. “I’m too young to buy a house”
There is no magic age when it comes to being ready to buy a home. It all depends on your specific situation. If you are 23 and tired of wasting your hard-earned money renting apartments and moving every year, who is to say you shouldn’t buy? Check out our 5 Steps to Buying your Dream Home blog post to learn more about preparing to buy! https://www.loanpronto.com/blog/5-steps-to-buying-your-dream-home
Sarah is a young professional living in Raleigh, NC that has been renting for a few years since she graduated college. Her monthly rent expense was $1,800 a month living in downtown Raleigh. Her main concern was that she didn’t think she had enough money for a down payment and didn’t even know where to begin calculating her monthly mortgage payment. So, we helped her break it down below!
Purchase Price: $220,000
Down Payment: 3% ~ $6,600
Monthly Payment: $1,501
Turns out buying a home was much less expensive than renting for Sarah AND she only had to put 3% down! Also, since we know the home value will increase about 3% every year, in 5 years she will have built tons of equity in the home and saved $18,000 paying $300 less a month on her rent payment.
Savings: $300 x 60 months =$18,000 SAVINGS!
So, if you have been debating whether or not to keep renting or buy a home, don’t waste another minute! Give us a call at Loan Pronto today to see how easy it is to get pre-approved!
Take a look at our checklist to see the basic documents you’ll need to apply.