I can’t tell you how many times I’ve spoken with someone who was afraid to pursue homeownership because they believed information about the homebuying process that simply was not true.
That’s why I’m a fan of the work that Freddie Mac has done with its Let’s Get the Facts on Homeownership campaign. The campaign was developed to address common myths and educate consumers so they would be empowered to buy their first homes.
Read on for some of the most widely believed myths, courtesy of Freddie Mac. Then let us work together to dispel them.
Myth 1: It’s a bad time to buy a home.
Truth: A number of factors make this, in fact, a very good time to buy a home. Not only are mortgage rates historically low, but house prices are nowhere near the peaks they reached several years ago. If you’ve been worried that the timing isn’t right, there are many reasons to reconsider.
Myth 2: I need perfect credit.
Truth: It’s true that lenders will consider your credit when determining whether to approve you for a mortgage. While your credit does not have to be perfect, you must show that you responsibly pay your debt obligations. The good news is you can start improving your credit today by paying your bills on time, paying off credit cards and keeping your debt-to-income ratio below 20 percent.
Myth 3: I can’t get a mortgage if I’ve changed jobs several times or if I’m self-employed.
Truth: The main thing lenders are looking for is your ability to show a stable income. If you’ve changed jobs but have maintained a stable income or even seen a salary increase, your ability to buy a home is unlikely to be hampered at all. I’m a big proponent of entrepreneurship and it is entirely untrue that you can’t get a mortgage if you’re self-employed. However, you will have to show that you make enough through your business to be able to pay your mortgage. Past tax returns can give lenders an idea of your business’s profitability.
Myth 4: Homeownership is too expensive and I don’t have the 20 percent needed for a down payment.
Truth: While there are many costs associated with homeownership, you may not be required to put down 20 percent. There are some programs that allow you to put down between 3 percent and 10 percent. However, you may have to pay mortgage insurance if your down payment is less than 20 percent.
Myth 5: The mortgage process is too complicated and risky.
Truth: I’m not going to sugar-coat this: Buying a house can be a complicated process. However, there are so many resources that are available to guide you that it does not have to be complicated for you. HUD-certified non-profit housing counseling agencies are here to walk you through the homebuying process, connect you with lenders and help you identify programs and loan products that might work for you.
The key to successful homeownership is information. Make sure you know the difference between fact and fiction.