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….
- “Owning is more expensive than renting”
- “I don’t have enough money for a down payment”
- “I’m too young to buy a house”
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
Let’s check out this real-life scenario from one of our borrowers who thought she was too young to buy a house too!
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!
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