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Debunking the Myths about Homeownership
Special to The Truth
As a result of the recent
housing crisis, many potential homebuyers, especially
first-timers, are hesitant to enter the market. But if
you’re holding back, evaluate why. Experts say your reasons
may be based on myth.
“Buying a home is more
affordable than ever for families with stable incomes and
good credit,” says Christina Boyle, Vice President and Head
of Single-Family Sourcing & Relationship Management, at
Freddie Mac.
So before ruling out
homeownership, get the facts. Boyle is offering some tips to
help you sort fact from fiction.
• Myth: I need to make a
big down payment, as much as 20 percent, to get a mortgage.
• Fact: A 20 percent down
payment is not the golden rule. Generally you should expect
to put down about five or 10 percent. Note however, you may
be required to pay mortgage insurance if you make a down
payment of less than 20 percent.
When deciding whether
homeownership is right for you, don’t forget to consider
other expenses like closing costs, property taxes, and
maintenance costs.
• Myth: I need perfect
credit to buy a home and will never qualify for a loan.
• Fact: In response to the
housing crisis, banks re-evaluated the criteria for lending
money to help put buyers in a more financially comfortable
position and ensure they can afford what they buy.
So while it’s true that
getting a mortgage today requires a stronger credit history
than in past years, you don’t need perfect credit. Keep in
mind though, that the higher your score, the more options
you have when looking for a mortgage.
• Myth: I don’t make
enough money to own a home so I plan to rent for the
long-term.
• Fact: In many areas of
the country, it is more affordable to own a home than rent
one, especially as rents are rising fast. With a 30-year
fixed-rate mortgage, you’ll have the certainty of knowing
what your mortgage payment will be for 30 years, whereas
rents could continue to rise.
Despite these facts, note
that homeownership is not necessarily the right step for
everyone. If you move frequently or don’t have time for home
maintenance, renting might make more sense for your
lifestyle.
• Myth: Mortgage rates
are rising too fast and I’ve missed the window of
opportunity to buy.
• Fact: While mortgage
rates have risen over the past year, they are still at near
historic lows, with a 30-year fixed mortgage under 4.5
percent at the start of 2014.
Courtesy StatePoint
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