Library of Congress Federal Credit Union

Becoming a homeowner is part of the American dream. While finding the right home can be easier than securing the right financing, it’s not as impossible as some would have you believe. Here are the top 5 home-buying myths explained.

1. You need a 700+ credit score. NOPE! While it’s accurate that your credit score plays an essential role in getting a mortgage, it’s only one of several factors. However, the higher your score, the better your rate, so it is essential to weigh the cost of moving forward now or waiting until your score improves.
2. You need a 20% down payment. NOT ACCURATE! The more money you can put down on a home purchase, the better off you will be in the long run. With that said, you don’t need a 20% down payment to purchase a home today. When searching for a lender, ask about down payment programs or check with your local or state housing development authority to see what is available in your area. At Library of Congress FCU, it may be possible to borrow up to 95% of the value of the home with an approved private mortgage insurance (PMI). That means only a 5% down payment.
3. If you get denied, you are done. NO WAY! The important thing to remember here is the best lender will get to know you and understand your financial situation. They will take their time to help you understand why you were denied and make recommendations on how you can improve your qualifications in the future.
4. It’s not the right time to buy. ONLY MAYBE. There’s no magic in timing interest rates or the real estate market. The number one factor in determining the right time to buy is your ability to purchase without getting in over your head.
5. Renting is cheaper than owning. SOMETIMES. Your rent may be less expensive than a mortgage payment, especially with no maintenance or repair costs. However, if you plan on staying in the area long term, it may be wise to consider a home purchase when you are ready. Homeownership offers stable payments (with a fixed rate loan), whereas rent amounts can rise annually. Moreover, long-term homeownership provides you with the ability to increase wealth over time.

Stories from the Stacks is Designed for You

The Stories from the Stacks blog is for everyone. From those facing financial challenges to those who simply want tips or a better understanding of their relationship with money, this is designed for anyone interested in advancing their financial life story. Let us know what topics you’d like us to explore next!