You Cannot Afford a
Home
Well over 50% of renters consider this as a financial barrier to
homeownership. However, study after study has shown us that there are major
misunderstandings about what is required to purchase a home. The biggest
misconception is the amount of a down payment required. A recent survey
revealed that 44% of respondents believed that a 20% down payment was required.
In actuality, mortgages are available with as little as 5% down (and even 3% in
certain situations). The same survey showed that 30% of respondents believe
that only individuals with ‘high incomes’ can obtain a mortgage. In actuality,
there are several programs intentionally created to help moderate income
families buy a home of their own (look at the FHA program for example).
You Do Not Have Good
Enough Credit to Get a Mortgage
The survey mentioned above showed that 64% of respondents
believe they must have a “very good” credit score to buy a home. Most people
don’t realize that the average credit score for closed loans has actually dropped 24 points in the last two years. For more
information on credit scores click here.
It’s Not a Good Time
to Buy a Home
Determining when is the right time to buy a home from a pure
financial calculation can be difficult. There are two elements of the cost of a
home: the price of the house and the mortgage interest rate. When considering a
purchase, you want to have at least an indication where prices and mortgage
rates are headed. According to over 100 experts,
house values are expected to increase by almost 20% between now and 2018. And Freddie Mac recently
projected that mortgage rates would be as much as one full point
higher by this time next year. With both prices and interest
rates projected to increase, now is the perfect time to buy a home.
It’s Cheaper to Rent
than Buy
This is a myth that doesn’t want to die. However, Trulia recently
reported that, in fact, buying is actually dramatically cheaper
than renting. Here is what they said:
“Homeownership remains cheaper than renting nationally and in
all of the 100 largest metro areas. In fact, buying is 38% cheaper than renting
now, compared with 35% cheaper than renting one year ago.”
Bottom Line
If you are even thinking about buying, get the facts from a
trained professional. You may be pleasantly surprised by what you find out.