Last month, PRMI was invited to participate in Lifetime Television’s “Designing Spaces.” The episode featured some of our top Loan Originators and was dedicated to helping homebuyers with “Navigating the Home Loan Process”. During the episode, PRMI advised a young couple who was purchasing their first home. Our objective was to help them feel more empowered and knowledgeable by clearing up some common home buying myths and misconceptions.
We were honored to have this opportunity and enjoyed being a part of this important conversation. However, it also turned out to be a learning experience for us. As lenders, the ins and outs of the mortgage industry are an everyday reality. It is easy to forget that many of our consumers don’t have the same knowledge that we do and there are some things that we take for granted.
Unfortunately, the media sensationalized much of the housing market crises and, as a result, some people are hesitant to become homeowners. This has also lead to misconceptions about buying a new home and qualifying for a mortgage.
It is important for us to help our consumers separate fact from fiction. Here are a few common home buying myths that could serve as road blocks to homeownership.
You need 20% down to buy a home
As lenders, we know there are many great loan programs available. We can inform our consumers about options with lower down payments such as FHA, VA and state housing programs.
Interest rate qualification
There is a surprising amount of confusion when it comes to interest rates. Borrowers sometimes think that everyone qualifies for the lowest published rate. Lenders can help them understand the different factors that help determine the interest rate for which they will qualify and which monthly payment will fit best their budget.
Fear of judgment
I have found that some borrowers are afraid that a lender will judge them. Perhaps this is because they don’t fully understand the qualification process. We can reassure our customers by letting them know that our goal is to educate borrowers and empower them to make the best decisions.
Prequalification versus preapproval
Lenders know the difference between being pre-qualified and being pre-approved, but consumers may not. It is important to help them understand the difference.
Income determines the loan amount
Many consumers believe that their monthly or annual income will determine the amount of money that they can borrow to purchase a home. Borrowers might not know that debt load is also an important factor.
One of the most important things we can do as lenders is to help homebuyers feel empowered and confident. They need to feel in control of the home buying process and comfortable that they are making the right decisions for themselves and their future. Purchasing a home is a big decision and a mortgage lender should be a partner and a teacher.