How lenders assess mortgage applications has changed a lot since 2007. What was acceptable a few years ago may not be so today. The following are some common homeownership myths:
Myth: It’s a bad time to buy a house.
Fact: Mortgage rates for fixed-rate mortgages are at historical lows, creating stable payments and long-term savings for today's homebuyers and house prices have fallen at a record pace. There is some financial relief for first-time homebuyers through the recently enacted Housing and Economic Recovery Act of 2008. Additionally, foreclosures have increased to record levels, leaving lots of housing supply in the market with unequalled demand. The combination of these factors generally equals greater affordability, and makes now a good time for many to consider homeownership.
Myth: Buying a house is just too risky; I'll end up in foreclosure.
Fact: The recent news on foreclosures is understandably frightening. Certainly if you lose your job, go through a divorce, or suffer an illness, you could have real trouble paying your mortgage, or rent for that matter. In recent years, we've seen an increase in excessive obligation–just too many bills–as a reason for delinquency. While you can't always plan for the unexpected twists and turns of life, good budgeting and responsible credit practices can decrease the likelihood of a foreclosure. Also if you have trouble paying your mortgage, click here to contact a Take Root Milwaukee counselor that can help you!
Myth: You can't buy a home in the U.S. if you're not a citizen.
Fact: If you're a permanent or non-permanent resident alien, you can purchase a home in the U.S. In order to qualify for a loan you typically need to be a permanent resident alien with a valid USCIS card or a "Green Card" and Social Security number. If you are a temporary resident alien with a valid work permit and Social Security number and have been in the United States continuously for the last 2 years, with steady employment and good credit history, you may also qualify for a loan.
Myth: If you don't have a bank account or credit cards, you can't qualify for a mortgage.
Fact: Having a bank account is always a good idea and helps you establish credit. However, lenders can approve you for a mortgage even if you don't have a bank account or credit cards. You'll likely need to present records showing a history of payments you've made for items such as rent, utilities, and car payments.
Myth: Lenders share your personal financial information with other companies.
Fact: By law, banks and other financial institutions are restricted in their uses and disclosures of information about you. In some situations, you may choose to restrict the disclosure of your information if you don't want it to be shared. If you are unsure how your information will be used, don't be afraid to ask – it's your right to know.
Myth: If you're late on your monthly mortgage payments, you'll lose your house.
Fact: If you have a financial hardship, like the death of your spouse or a medical emergency, and fall behind, it's possible to keep your home and get back on track if you contact your lender early (the organization to whom you make your monthly mortgage payments, sometimes also referred to as your mortgage servicer).
If you experience a change in your financial situation and think that you will fall behind or have fallen behind on your mortgage payment, call your lender immediately.
Despite popular belief, lenders do not want to foreclose on homes. They want to keep you as a customer for life. In fact, lenders typically lose money in the foreclosure process, so they look for ways to help you make ends meet.
Myth: You can't get a mortgage if you've changed jobs several times in the last few years.
Fact: Not true. You can change jobs several times and still get a loan to buy a home. Lenders understand that people change jobs. The important thing is to show that you've had a stable income and good credit.
Take Root Milwaukee along with our trusted participants are available to help you navigate and understand homeownership. Together we provide free or low-cost, reliable and confidential assistance to help you understand the buying process, mortgages, and steps to take to ensure that you stay in your home.
© 2010 Take Root Milwaukee. Take Root is a service mark of Freddie Mac.
The consumer information on TakeRootMilwaukee.org is used with permission from Freddie Mac. Freddie Mac offers extensive, regularly updated consumer information about buying and owning a home on its website, www.FreddieMac.com, in the “About Homeownership” section. Freddie Mac is not responsible for content errors or omissions on TakeRootMilwaukee.org.
The funding source of this activity is the Milwaukee Homeownership Consortium and Freddie Mac.