The Five MYTHS That May Be Keeping You From Your First Home

There are five common myths that prevent many renters just like you from becoming homeowners. We’ll show you the truths behind these myths – truths that have helped millions of Americans become homeowners, and can help you too!

 Myth #1: I don’t need to talk with any lenders until I’ve found the home I want to buy

 Fact: If you’re going to take out a mortgage to buy your home, you should get a pre-approval before you start house hunting. That way, you’ll get a better mortgage – and a better deal on your house. (It’s also a required part of the home purchase contract in Arizona.)

 Another benefit is that you’ll know how much house you can afford. With a pre-approval, you can figure out how much you’d pay in monthly mortgage payments on any given house price. Doesn’t it make sense to know how much house you can afford before you go house hunting? That way, you save time by looking only at homes that are within your budget.

 So, before you start house hunting, get a written pre-approval from a mortgage lender. You’ll get a better mortgage and a better deal on a house, and you’ll avoid wasting time hunting in the wrong price bracket.

 Myth #2: You need to come up with a 20 % down payment

Fact: There are many local, state, and federal programs designed to help lower-income or first-time homebuyers purchase a home with less than a 20% down payment. These programs include:

• Home in Five, jointly sponsored by the City of Phoenix and Maricopa County, this program offers a grant of 5% of the loan amount for a down payment and closing costs. More information on this program is available at http://phoenix.gov/HOUSING/sfmrbp.html.
• The City of Tempe’s Community Assisted Mortgage Program (CAMP) and the American Dream Down payment Initiative (ADDI), designed to help low-income households purchase a home. More information is available at http://www.tempe.gov/housing/CAMP/Steps%20to%20Homeonwnership.htm.
  
• Arizona Housing Finance Authority (AzHFA) Mortgage Revenue Bond (MRB) program, which offers prospective homebuyers a 30-year fixed rate mortgage at approximately 1-percent below market.
• The City of Phoenix’s Home Investment Partnerships Program (HOME). More information is available at http://phoenix.gov/HOUSING/fthb.html.
• The City of Glendale’s Los Vecinos Housing Development, Inc. First Time Homebuyer Program.
• The City of Scottsdale’s First Time Homebuyers Program, which offers home purchase counseling, down payment and closing cost assistance, as well as post-purchase counseling to low and moderate income first-time homebuyers. And Scottsdale’s Low-Interest Loans Program, which offers 6.30 percent, 30-year fixed rate mortgages and grants equal to 5 percent of the loan amount to be used toward down payment and closing costs. More information is available at http://www.scottsdaleaz.gov/assistance/housing/buyer.asp.

The Federal Housing Administration (FHA) manages the federal homebuyer assistance programs; check out their website at www.fha.gov. And check with your state and local governments to see what kinds of programs they might offer for first-time buyers. Many of these programs have income and loan amount caps, but they’re certainly worth checking in to no matter what your situation is.

Most importantly, hire a real estate agent that knows about first-time homebuyers assistance programs and can guide you to the one that’s just right for you. To chat with a real estate expert at MyPhoenixMLS.com today call 602-318-1114 or 1-866-249-1678 or e-mail info@myphoenixmls.com.

Myth #3: If you don’t qualify for government programs, no lender will help you if you don’t have a 20% down payment

Fact: From 80/20 piggyback loans to 100% financing, many lenders offer loan programs designed for first-time homebuyers who don’t have a 20% down payment. These loans typically carry higher interest rates, but it may be a worthwhile trade-off for buying your own home today.

Your real estate agent should be able to point you towards mortgage lenders that offer loan programs designed for first-time buyers without 20% to put down. By choosing a mortgage expert who your real estate agent has worked with before, you’ll get a better deal – and you can rest easy knowing that you’re working with someone who is experienced and has a proven track record.

 Myth #4: There’s nothing the seller can do to help me with financing

Fact: Sellers have several options to “help” you as a buyer with financing, including:

• Help with closing costs. Often, a motivated seller will offer to pay some of the buyer’s closing costs.
• Carrying part of the loan. If the seller carries part of your loan, he acts like a bank – you pay the seller monthly payments.
• A lease-purchase option. Some sellers will be willing to let you “rent to own.” You rent the home from the seller for 1-2 years and each month a portion of the rent you pay goes toward the purchase of the home.

 Myth #5: If I don’t have a 20% down payment already saved, I’ll have to go into debt to get it

 Fact: If you have money in a retirement account, you may be able to borrow against the account in order to make a down payment on your primary residence. Avoid making a withdrawal from the account – you’ll have to pay heavy early-withdrawal penalties in that case. Instead, take out a “loan” from the account. You’ll have to repay the loan with interest every month, but that interest goes right back into your account.

 Because every person’s situation is unique, you should consult with your tax advisor to learn about the pros and cons of borrowing from your retirement accounts for a down payment.

The American dream can be yours! But there’s no need to navigate the process of home buying yourself. The real estate experts at MyPhoenixMLS.com can guide you from renting to home ownership. Call us today at 602-318-1114 or 1-866-249-1678 or e-mail info@myphoenixmls.com.