Harvard University recently concluded a study in which the Joint Center for Housing Studies evaluated why renters do not always have plans to own in their future. The chief reason was financial concerns, rather than any lifestyle perks they feel are linked to renting. Below is hopefully some information that can ease fears and remove myths about buying.
A Home is Not Affordable
This is one of the top reasons renters specify that they cannot participate in home ownership. Yet, many studies show that numerous people are not clear on what is truly necessary to own a home.
In line with this is confusion around how much money is required for a down payment. One survey that was recently completed showed 44% of participants thought the requirement for a home purchase is a 20% down payment. However, it is most definitely possible to purchase a home with only putting 5% and sometimes only 3% down.
Another common myth is thinking that it is only possible to acquire a mortgage if you have a “high income”… But, this is not the case. The government has developed specific programs to encourage moderate income families to purchase their own home (the FHA program is a great example).
Your Credit Score Has to be Very High
In order to buy a home over 64% of respondents stated that they think they must have a “very good” credit score in order to obtain a loan. Yet, over the last 2 years the average score required to purchase a home has dropped 24 points. If you would like more information on credit scores please contact us.
Is Now Really a Good Time to Purchase?
It’s important to remember that only referring to financial calculations when deciding on the best time to buy a home can be challenging. Keep in mind that the interest rate, as well as the cost of the home both play a role in the purchase. Therefore, as you think about timing your purchase, it’s very helpful to know the direction in which rates and prices are going. Over 100 professionals have determined house values are expected to increase by almost 20% between now and 2018. By this time next year, Freddie Mac has concluded that rates could be close to one full point higher. With both prices and interest rates projected to increase, now is the perfect time to buy a home.
Buying is Way More Expensive than Renting
Who knows if this myth can ever really be debunked?? However, in a recent report Trulia stated that buying is actually dramatically cheaper than renting. Here is what they said:
“Homeownership remains cheaper than renting nationally and in all of the 100 largest metro areas. In fact, buying is 38% cheaper than renting now, compared with 35% cheaper than renting one year ago.”
At the end of the day, get with a trained professional and make sure you have your facts straight. You might be a prime candidate for home ownership!