Home Ownership prejudices

Bad credit, low score - not a problem now. It was at 90th - when you cannot buy a home with less than perfect credit. Today loan programs, qualifying and credit evaluation is much different, there are ways to repair the damage in your credit and bring your score back up. Your loan officer can guide you through this process.

Another myth is that you need 20% down payment to be able to purchase a home. Not any more, there are so many different programs available to select from, especially if you are an owner occupant.

Closing cost is another mystery to buyers. They think it is tens of thousands of dollars. This can be minimized if you make your own work sheet, understand the charges and lack of, and what program you will pursue. The majority of the charges can be the cost of the mortgage loan. The lender may charge you points and origination fee. The point is a one percent of the total loan amount, and it can be substantial. To eliminate this, you may inquire about loans with no points or origination fee, it is slightly higher interest rate, but, it will enable you to work with the limited cash you have to close your purchase.

Another way of getting cash for closing cost is to have your realtor ask for credit from the Seller toward your closing cost.

The most unrealistic myth is thinking that you can buy the home today, and sell it tomorrow and make a bundle of money. Wrong, even if there seems to be profit on surface, take it little further and find out what your bottom line is. Let us say you purchased a home for $150,000 and after closing, you realized you can actually sell it for $175,000. You get excited, thinking you can make $25,000 with minimum effort. Keep in mind that there are expenses associated with selling the house, assume $10,000 or so. Then there is the tax on the gain, and the gain here is treated as ordinary income, so, depending on your tax bracket, the IRS and your state will take a nice big bite from the $25,000 that you thought is yours; assume may be $7500 for taxes, so, after all the excitement, you are left with $75,000 if you are lucky, and this is without counting all your expenses when you purchased the home.

Another myth is that your monthly payment will be fixed, since you have a fixed rate mortgage. Remember, your monthly payment consists of : the principal and interest, taxes, hazard, hurricane, earthquake, floor insurance and may be association dues.

If the monthly principal and interest remains constant, all the other ones can fluctuate over the years. Just be aware of it and prepared.

And the last but not leasth myth: only funds needed toward the home are the monthly payment. Any part of the house may need attention any time, and without warning. Now you are your own landlord.

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