Big Myths About Homeownership
Chuck Bishop, SVP, Correspondent Busi- ness Opportunities, Solutions and Support, Wells Fargo Funding | 6/11/2014, 2 p.m.
When I was young man starting in the banking industry, I had a mentor suggest that instead of renewing the lease on my apartment, I should buy a home. As simple a concept as this is, it was a game-changing piece of advice. At that time, I did not believe that I could – or needed to – own a home. I fell into the trap of believing the “myths of homeownership.” After years in the mortgage business, I now know a whole lot better and I want to dispel those myths.
Myth: I have to have perfect credit.
There are mortgage products that allow flexible parameters for qualifying. Start by getting a copy of your credit report (you are allowed one free report every year). Then, if you need to get yourself “credit ready,” work with a housing counselor or a home mortgage professional to learn how to get there.
Myth: I have to have a big down payment.
Not necessarily the case. Some mortgage products allow for smaller down payments. Moreover, if you’re a veteran, or a resident in certain geographies, you may be eligible for programs with a very low down payment. In many areas, down payment assistance can soften the burden for a first time homebuyer.
Myth: I need to wait for the bottom of the real estate market.
From February 2013 to February 2014, nationally, median home prices were up 9.1% annually1 and existing home prices were up 6.9% annually2. Start by talking to a local lender who can help you get prequalified for a loan. This is easy to do and it gives you a much better understanding of what your affordability situation looks like. Remember, stay within your means. The challenge is not to buy the home, but to keep your home.
Myth: Renting a home is better for me than buying.
Homeownership has long been the first vehicle used to accumulate wealth for many households, and homeownership may offer tax advantages that are not allowed with renting. Remember, if you are renting, you are paying a mortgage – it’s just that it’s not yours, it’s your landlords!
Don’t believe the myths!
I frequently see that these myths may prevent people from considering homeownership. However, if owning a home is right for you, start by setting a plan, work with a professional like a real estate agent, local lender or local non-profit credit counselor. You may find very real opportunities to be a homeowner. I remember contemplating if buying a home was right for me. Fortunately, I listened to a professional and bought my first home instead of signing my second lease. I have learned significantly from my personal experience and for the past nine years, I have applied that experience in working with my team and our division to help over 1,500,000 minority or low to moderate income families attain the dream of home ownership.
Chuck Bishop lives in Maryland and works in the Correspondent business-to-business lending channel of Wells Fargo.
National Association of Realtors: http://www.realtor.org/news-releases/2014/03/february-existing-home-sales-remain-subdued
Federal Housing Finance Agency: http://www.fhfa.gov/AboutUs/Reports/ReportDocuments/MonthlyHPI42214Final.pdf