The fact is buying a home is much different than it was 10 years ago, there are many myths surrounding the process.  It's amazing what we hear when we talk to people about buying a home and getting a new mortgage.  Let's see what we can solve here!!

Myth #1 – You need 20% down to even think about buying a home.  Not true!  There are several different programs that allow anywhere from zero to 3.5% down – you can pu 20% down if you have it, but you aren't required to.  VA and USDA mortgages will allow 0 down.  FHA will allow 3.5% down.  There are some special programs through housing agencies, such as Minnesota Housing that will allow 3% down on conventional loans.  If you aren't given different options, you may want to talk to another lender.

Myth #2 – You need perfect credit to get a mortgage.  Not necessarily true.  You do want to keep your credit score as high as possible, but most lenders will go down to 640 on FHA mortgages.  With the different issues affecting so many people with employment and housing over the last few years, it's not uncommon to see issues on credit reports.  There is a new program with FHA that will help those that have had issues in the last few years – it may allow you to buy a home within a year of a bankruptcy if you can prove extenuating circumstances due to the economy.

Myth #3 – Fixed rate mortgages are the only way to go.  Not necessarily true, but you need to make that decision for yourself.  If you are only going to be in a home for a short time – 3 to 5 years, it may be worth considering an adjustable fixed rate loan. You can save yourself thousands of dollars in interest, but make sure you are comfortable with that decision.  Many people have had adjustable rate mortgages and not had a problem.  The mortgages with interest only ARM's or negative amortization ARM's are gone.  If you think you will be in the house for at least 5 years, it probably makes sense to get a fixed rate mortgage, either a 15 or 30 year.

Myth #4 – Cut out the realtor, represent yourself and save 3%.  That is almost never true.  As a buyer, the realtor fee is paid by the seller.  If you do not have your own realtor, you do not have any representation.  Usually the seller has an agreement with their agent to pay a total of about 6%, that is split between the listing and selling agent.  If you represent yourself, you will rarely see a 3% reduction in price.  You never know what issues may come up during the process, it definitely is worth your time and money to have someone that is helping you.

Myth #5 – Now is a great time to buy a home.  While it is a great time to buy, it may not be right for you.  You need to make sure you are in a stable position, you plan to be a one area for several years.  If you think you may be transferred for work, it may not be a good time to buy.  If you are concerned about your job, it may not be a good time to buy.  But if you know things are stable, it is definitely a great time to buy!

Talk to your realtor and your lender, make the best decision for you.  Homebuying is not always an easy process, but it is still worthwhile!  Homes have been appreciating in value in most areas, interest rates are stable but starting to slowly rise.  Have fun looking at new places to  live!  Maybe you want to move to the city or maybe you want to live in the country!  Look around and decide what is best for you!

Leslie Vanderwerf,  NMLS ID#335509, American Mortgage & Equity Consultants – EmailWebsite

About Leslie Vanderwerf

Currently a Branch Manager for American Mortgage and Equity Consultants, Inc., it's hard to believe I have been in the mortgage business for more than 25 years and have worked with Sharlene since 2000! I love sharing mortgage insights here each week and helping people finance their homes. Listening helps me find the right program for you!

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