As you google ‘The American Dream’ you may come across this definition: the ideal by which equality of opportunity is available to any American, allowing the highest aspirations and goals to be achieved. There was a time when one of those highest aspirations was to buy a home and to some degree, it still is today. Owning a home is not only in the United States of America, but generally all over the world, an indication of a certain social status higher than the minimal.
If you are reading this article, you may be interested in purchasing a home in the future. You have certainly heard diverse opinions related to the topic such as it is best to have twenty percent of the home value of the house as a down payment, among others. This article touches on three major points that you have most likely heard, which may not be true in your case or even relevant.
It’s Always A Great Investment
People will tell you that buying a house is always better than renting, emphasizing the idea that paying rent is essentially wasting money while you could be redirecting the funds to an asset. It’s true that house prices are on the rise and you may make money when you sell the home in the future, however, there are a lot of different factors to consider. In 2008, many were unfortunately surprised by the economic downturn which took over the world and the housing bubble that some thought they would take advantage of burst seeing house prices drop at an unbelievable pace. In real estate, it is common knowledge that the location of the property has a big impact as well and if it isn’t in a great area, the chances of it appreciating in value become slim. That doesn’t mean that you shouldn’t buy a home, just don’t assume that it’s always going to be a cash cow. If you’re renting and trying to save for a house, be diligent in your planning and patient. It is well worth being in the right financial position before pulling the trigger and enjoying where you live without the anxiety related to the appreciation in value of your property.
Your Below Average Credit Score is Sufficient
When the market is booming and profit is being made by the organizations that hold your mortgages, the tendency to make you believe that your below average credit score is good enough increases. At the core of the banking industry reigns the prevalent notion of profit at your expense. A below par credit score may do today but is it advantageous for you, the debtor? If you have ever gone through the exercise of purchasing a vehicle as a youngster, you know the importance – or at least have realized at this point – the usefulness of a good credit score. Your interest rate is impacted and in the long run, it means thousands of dollars at your cost. Multiply that ten, fifteen, twenty time when it comes to a mortgage. Having a good credit score will help in attaining a reasonable interest rate, saving you tens of thousands of dollars.
Pre-Qualifying Means You Automatically Get A Loan
Most mortgage providers will have a system for pre-qualifying people for loans but don’t get that confused with being pre-approved. If you’re pre-qualified it means that you have a good chance of getting a loan but it doesn’t mean that you’re the ideal mortgage applicant and that you’re definitely going to be approved. We live in a data driven world today and whomever has the most information related to you wins. Banking is also driven by data and yours is priceless to the companies. Once they have you as a record, they will consistently come back to you. So, the lesson is that an invitation for pre-qualification should be carefully considered. Your due diligence will be the factor that makes your home buying experience as smooth as it could be.