For decades, homeownership has been an essential element of the American dream. And buying a home has been viewed as a powerful, positive, and life-changing experience.
Yet I continue to hear from a surprising number of people who believe homebuying is out of reach — particularly those with low to moderate incomes, or who’ve had credit issues in the past, or are unsure of how to build credit.
When I dig a little deeper, three key myths seem to be at play — and the following tips for buying a home can help remove the perceived roadblocks:
Myth 1: You need 20 percent of the home’s price as a down payment. It’s true that if you put down more, you will have a lower monthly payment. However, 20 percent isn’t necessarily the standard anymore. Through programs like those offered by the FHA (Federal Housing Administration), the down payment for many first-time homebuyers is as low as 3.5 percent.
Myth 2: You need perfect credit. While a strong credit history is helpful, a lower score doesn’t rule out owning a home. Your credit history and credit score will be examined before the decision to loan you money, so it’s a good idea to check your credit history and correct any problems before applying.
Myth 3: The process is too hard. Buying a home can be complicated — but it doesn’t have to be, especially if you’re prepared. Loans must be fully documented, so understanding the types of documentation required is important. Many first-time homebuyers find that the loan application process seems easier than expected when they educate themselves and understand what’s needed at the beginning.
In addition, it’s important to educate yourself so you can make informed choices. Tools like the Online Learning and Planning Center, the My FirstHome® and My Home RoadmapSM services, and the Hands on Banking,® NeighborhoodLIFT® and CityLIFT® programs can help people who are looking to buy, but may not be credit-ready or just need additional information.
Homeownership is personal and powerful
In 1993 interest rates were more than 7 percent. I’ll never forget it because that was the year my wife and I bought our first home together, and we thought we got a great deal! The home was modest, but it felt huge compared to the apartment we’d been renting – and we loved it. There was something undeniably special about having a home to call our own and a place to build our life together.
Today, interest rates are lower and the housing landscape has changed, but what remains constant is the sense of personal pride and financial achievement that comes with owning a home.
In the end, homeownership remains a tremendous opportunity and a tremendous responsibility. And while it may not be right for everyone, if you’re ready to buy and you prepare for the process, it may not be as difficult as you think.
Do you have a personal story about how homeownership helped you achieve your dreams? Use the “Leave a comment” feature below to share your ideas.
Codel is the head of Mortgage Production for Wells Fargo Home Lending, which includes sales, operations, quality, compliance, underwriting, and support for the company’s Retail and Correspondent Mortgage lending channels.
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