5 Myths About Home Ownership
Buying a home is a staple of the American Dream. It is simultaneously exciting and nerve-wracking. Potential homeowners are bound to be hit by an onslaught of well-meaning but sometimes incorrect advice. We’re here to separate fact from fiction.
Great Credit Only
Lenders have been wary of home buyers with less-than-stellar credit since the housing crisis. Have no fear: you can still get a home with imperfect credit. There are a few options. The government offers a variety of loans, so check if you qualify. You might also be able to negotiate on the down payment. If you can pay a large amount up front, lenders may be amenable to you, especially at community banks. Local institutions are more flexible than big banks, so your odds of approval are better.
You Must Pay 20 Percent Down
A down payment of 20 percent is standard but not required. If you cannot afford it, consider the alternatives. There are federally insured loans with smaller down payments, as low as 3.5 percent. You may also be able to secure a lower down payment if you can pay a high interest rate. To get a full picture of your choices, meet with a mortgage lender.
All You Pay Up Front is the Down Payment
While the down payment is the major cost when buying a home, it is not the only cost. Take into account the money needed for closing costs, home preparation and emergency funds when saving for a house. You don’t want to start your journey as a homeowner with unexpected financial strain. If you are worried about additional costs, see the assistance programs listed by the Department of Housing and Urban Development (HUD).
Homeownership vs. Renting
There is a debate raging about which is better: homeownership or renting? Truthfully, it all depends on your specific situation. If you move a lot and have no long-term plans in a location, renting will be less of a hassle. However, if you are putting down roots in an area, buying a home is a better idea. Houses are expensive, and it can take a while to recoup that value, but over time you will see greater financial gains than through renting.
Remodeling Always Adds Value
Trying to improve your home is generally a good idea, but not all projects are equal. Some can actually decrease the value of your home. It is important to research remodeling ideas on a case-by-case basis. You want to be sure that new pool or patio is actually going to be worth the time and money to build. It will depend on the market you are in, so be sure to contact a local real estate expert for advice.