Why Research is Important While Home Buying

Let’s face it, home buying is no walk in the park, but the more you know about the process, the better off you’ll be when it comes time to making those tough decisions. I think we can all agree that buying a house is as stressful as it is joyous, mainly because everyone seems to have their own opinion on what to do first; what financing method is better; whether buying is the right move or not; even how much money you should put down. We know that there’s a million things that need to be taken into account, but what happens when some of those things aren’t quite right? The housing market is constantly changing and so is the home buying process; hence why conducting research is so important because it could save you from wasting time worrying about misconceptions.   

  1. You Need to Have Excellent Credit to Become a Homeowner 

Contrary to popular belief you do not need to have at least a credit score of 700 or higher to get approved for a mortgage loan; in fact, there are plenty of financing options designed specifically for consumers that have lower credit scores. Take a FHA loan for example, the minimum score required for this type of loan is usually a 580, well below the 700 credit score mark. Another type of loan that lower credit score holders could apply for would be the USDA loan, which only requires users to have a minimum credit score of 640. Now while VA loans aren’t readily available to civilians, if you, your spouse, parent, etc. have ever served in the military, then you could apply for one and not have to worry about strict credit requirements. 

Do you feel a bit more relieved? We figured you would, especially because the majority of individuals make it seem as though you have to have a nearly perfect score or else you’ll never become a homeowner. Of course, requirements are lender specific, but it is important to keep in mind that your dream of becoming a homeowner does not have to be trashed because you don’t have perfect credit. 

  1. You Need to Put 20% Down 

Did you know that you didn’t have to break the bank, empty out the good-old savings account, even go broke while trying to buy a house? “I’ve been told that I have to put 20% down or more in order for my offer to even be considered seriously.” Would you believe us if we told you that some home loans only require a minimum down payment of 3%? It’s crazy to think that you could become a homeowner with as little as 3% of a home’s worth; ultimately your down payment amount comes down to your credit score, loan option, and how much you can realistically put down that’ll determine that end cost. It’s also important that you keep in mind that the higher your credit score, the more likely you’ll have to put less of a down payment and vice versa. 

Home loans like FHA loans require at least 3.5% down; then there’s the conventional loan that can require anywhere between 3%-15% down, and finally the VA and USDA loans that can require literally nothing down. Once again, it’s always best to research and compare loan options to see which one best fits your budget; when in doubt, it’s always best that you ask your lender. 

Now even though you could choose to put down less than the traditional 20%, you’re going to get stuck paying private mortgage insurance (PMI), there’s no way around it until you’ve built up that 20% equity. We’re not saying that PMI is a bad thing, in fact if you were to default on the loan it ensures that lender’s get their money back, so don’t think of it as if you were pointlessly losing money. 

  1. You Only Need to Save For a Down Payment and Closing Costs 

Sure, the down payment and closing costs are very important parts of buying a home and they can definitely take a while to save up for, but is that all that you should really be saving for? Your down payment and closing costs are referred to as upfront costs; however, there are ongoing costs that you need to be able to cover after buying a home. 

  • Ongoing costs include: 
    • Mortgage payments 
    • Property tax 
    • HOA fees 
    • Private mortgage insurance (PMI) 
    • Maintenance, repairs, and utilities 

Homeownership definitely comes along with a hefty price tag doesn’t it? There’s so many costs that seem to be overlooked and yet they’re equally as important, if not more. It’s important that when you’re home buying you create a budget to see what kind of home you can realistically afford. The worst thing you could do is buy a home that you can’t afford and end up in a very stressful financial situation. 

  1. All Mortgage Lenders Are the Same 

Does it really matter what loan I select, they all serve the same purpose anyways? While many people believe that all mortgage lenders are the same, they’d be wrong because they don’t all carry the same loan products or have the same requirements. While one financial institution might heavily focus on VA loans, like USAA and Navy Federal Credit Union, other lenders like CMG Financial and Fairway Independent Mortgage Company focus primarily on USDA loans. 

Also shopping around for a mortgage can help not only find a loan that’s right for your budget, but it could help land you the most savings; it literally pays to shop around. Remember, just like there’s no one size fits all for credit repair, there’s also no one size fits all solution for buying a home; everyone’s budgets and home goals are different.   

  1. You Can’t Buy a Home If You Have Student Loans

Did you really think that your student loans were going to be the reason you couldn’t get approved for a home? Some may argue that your student loans weigh heavily on your debt-to-income ratio (DTI), but as long as you have a reliable source of income and you’re making your payments on time, then you shouldn’t stress about it. Remember, not all debt is bad as long as you’re handling it responsibly; in fact, if you’re handling your student loans correctly, then they’re actually adding positive credit history onto your report, as well as diversifying your portfolio.

If you’re really concerned about your student loans affecting your DTI to the point of getting rejected for a mortgage loan, then focus on bringing down your debt below 50% of your income. Remember, your student loans, or any other line of credit will only stop you from being eligible for a home if you’re acting irresponsibly and not making payments.    

  1. I Need to Find a Home Before Choosing a Financing Option 

The worst piece of advice that anyone could give you before you even begin the home buying process is to find a home before you have any kind of financing lined up? Isn’t it better to know what house I want first though? If you find your dream home, but don’t have any way of financing it, then someone else could swoop in and snatch it right from under you. We don’t know about you, but the last thing we’d want to see is you heartbroken because you weren’t prepared and someone beat you to your dream home. 

It’s always best to have those offer or pre approval letters at the ready because you’ll never know when your offer will be accepted; plus, it lets sellers and realtors know that you’re serious about buying a home. Remember, the goal is to be as prepared as possible, so don’t just rush into a decision as important as this and choose a home before you even have a plan in place. 


There are plenty of misconceptions out there, trust us this isn’t our first rodeo, so take our word for it when we say that the best thing you could do is to do your research. There’s no need to stress about misconceptions that are only going to do one of two things, either stress you out or slow you down. When in doubt or if you feel like you need some guidance maneuvering this hectic housing market, let our experts know and we’ll be more than happy to help out.