Buying a home is the American dream, but for many people, it’s one they fear will never happen.
After all, when it comes to the home buying process, there are lots of misconceptions floating around.
If you think owning a home is out of reach, continue reading. You may be pleasantly surprised, especially with how much home you can afford with our own, Credit Union mortgage company (details at bottom). Here are the top five home-buying myths you need to stop believing in:
Myth #1: You need a 700+ credit score.
While it’s true your credit score plays a big role in getting a mortgage approval, it is only one of many factors. Actually, with federally insured mortgages like an FHA (Federal Housing Administration) or VA (Veterans Administration) loan, you don’t need a perfect credit score to qualify. Of course, the higher your score the better your interest rate. This means, it’s important to weigh the cost of moving forward or waiting until your score improves.
Myth #2: You need a 20% down payment.
Let’s be clear, the more money you can put down, the better off you are in the long run. That said, you don’t have put 20% down to purchase a home. There are plenty of affordable mortgage options that require little or no down payment. When searching for a lender, ask about down-payment programs or check with your local or state housing development authority to see what’s available in your area.
Myth #3: If you get denied, you are done.
Not all lenders are created equal. If you were denied for a mortgage loan previously, think positive! The important thing to remember is that the best lenders get to know you and your financial situation. They’ll take time to help you understand why you were denied last time, and make recommendations to improving your chances this time around. Most importantly, a good lender will help you determine how soon you can expect to be financially healthy enough to apply with confidence.
Myth #4: It’s not the right time to buy.
It is likely you’ve heard of someone who made quick money on a house flip. But buying a home is not the kind of investment you typically make a rapid, large return on. Although there’s always the possibility of rapid price appreciation and equity building, a home purchase should be considered a long-term investment. And, there’s no magic way of predicting the timing of interest-rate or home-price changes in the real estate market. When determining the right time to buy, look mainly to your ability to purchase without getting in over your head.
Myth #5: Renting is cheaper than owning.
Sometimes, renting is cheaper than owning, especially in the short term. Your rental payment may indeed be less than a mortgage payment, and you’ll likely have little or no maintenance or repair costs. However, if you plan on staying in the area long term, it may be wise to consider a home purchase when financially ready. Home ownership offers stable payments (with a fixed-rate mortgage) whereas rent can and often does go up annually. Moreover, long-term home-ownership can build equity which increases your wealth over time.
While the road to buying a home is sometimes burdened with speed bumps, it is still one you can maneuver with the right plan and the right professional guidance. A great place to start is our own Mortgage Company, Community Mortgage Funding. It’s owned by members, like you, so it offers exceptional, hand-holding service and awesome rates. Plus closing-cost and realtor discounts, and $0- to-low-down payment mortgages. Get started by filling in this quick inquiry form.