Are you considering taking the plunge and becoming a homeowner?
Well, first, congratulations to you! But second, before you apply for that mortgage, read this!
LearnVest founder and CEO Alexa von Tobel stopped by to break down some "money-savings myths" for us, and one of the most important ones she addressed? This common belief about mortgages:
"A 20 percent down payment is required to get a good loan on a house."
Fifty-seven percent of the polled audience said this one was a truth — and Alexa was thrilled, because they're right!
"If you can't put 20 percent down, maybe you shouldn't be buying a house," says Alexa — specifically because you don't want to get in over your head!
She adds, "While legally, you can technically go get a mortgage earlier for less — under 20 percent — I don't advise it because your interest rates are higher. And at the end of the day, you really want to be able to put 20 percent down."
If you're still on the fence, Alexa says to consider these three questions:
1. Can I find something that costs no more than 2.5X my annual income?
2. Can I put at least 20 percent of that amount into a down payment and still have 6 to 9 months of emergency funds left over?
3. Will the calculated mortgage be less than 35 percent of my monthly income?
When you can confidently say yes to all three questions, that's when you should apply for that mortgage!
Plus, have you ever wondered if it's okay to lend money to family and friends once you're retired? See what Alexa has to say about it below!