Myths, Mistakes & Misinformation

Bill Gray June 20, 2019

During June Homeownership Month, we’re looking at the benefits of homeownership education prior to becoming a first-time homebuyer. This week, we dust off an infographic discussing five myths, mistakes and misinformation around the buying process.

If you’re exploring homeownership, you might have seen or heard one or more of the following statements:

  • Hurry and Buy Now – Homes will never be this affordable again…
  • Bigger is Always Better – Borrow every dollar you qualify for…
  • Mortgage Payments Never Change – They’ll never go up, and they’ll never go down…
  • Perfect Credit is a Must – Don’t even bother to consider homeownership if you’ve ever had any financial problems…
  • Twenty Percent Down is Always Required – If you can’t save up twenty percent, you’ll never qualify for a mortgage…

The fact is, each of these statements is false. Here are the facts:

  • Don’t ever feel pressured to move more quickly than you’d like. Home prices rise and fall from month to month and year to year. While the macro trend shows that values generally increase faster than inflation over the long term, purchasing a home should never be rushed. Take the time to learn how the process works by taking a Home Stretch education class and working with a homeownership advisor. Get ready, so you can be ready when you find the perfect house.
  • A realistic, long-term budget should guide the amount you borrow. While you may qualify for a certain amount, you’re the one who’s going to have to come up with the money to pay each month. A homeownership advisor can help you analyze your finances and build a realistic budget that you’ll be able to work with well into the future.
  • Monthly mortgage payments can change from year-to-year. While the principle and interest stay the same, the amounts you pay toward escrow for property taxes and homeowners insurance can go up or down based on these items increasing or decreasing in cost. When primary mortgage insurance (PMI) is involved, this amount included in your monthly payment can eventually be eliminated based on the amount of equity you accrue.
  • Bad credit can be repaired, and credit scores can be improved. While your credit score is an important factor in qualifying for a mortgage loan, perfect credit is not a requirement. Scores range from 300-800. The higher your score, the more options you have when seeking a mortgage – including access to lower interest rates. Generally, scores above 620 can qualify for some type of mortgage. A homeownership advisor can help you see your current score, and build a plan for you to improve the score if needed.
  • You don’t need to put twenty percent down. This may be the most persistent falsehood out there. There are many reputable loan programs and options that require as little as three percent down. While you may have PMI premiums added to your monthly payment until you build up enough equity to drop it, you can get into a home of your own before saving up twenty percent of the purchase price. A homeownership advisor can work with you to determine what mortgage and downpayment options will work best for you.

To view the original infographic discussing these five myths, click here and enlarge the image for ease in reading.

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