A recent survey of homeowners and home buyers by real estate website Zillow makes one thing very clear: Many people are confused about mortgages. And by being befuddled, they may be missing out on a historic opportunity to buy a home or refinance. Here are three key mortgage myths – and what borrowers really need to know:
You can’t get a mortgage these days without a big down payment. Nearly one-third of home buyers in the survey said they don’t think it’s possible to buy a home for less than 5% down. That’s simply not true. Loan programs offered by the Federal Housing Administration, the Department of Agriculture and Veterans Affairs enable lenders to offer low- and no-down payment loans to qualified borrowers.
You have to wait a long time to buy a home if you have gone through a short sale or foreclosure. A third of homeowners in the survey expected to have to wait at least seven years to buy a home again after a foreclosure or short sale. The reality? Some homeowners who have sold their homes via a short sale or lost their properties to foreclosure are buying homes again in as little as two to three years. It all depends on your income, how responsibly you’ve handled your finances since the short sale or foreclosure and how much money you’ve saved.
You can’t refinance if you’re underwater. In the survey, about one-fifth of homeowners said they didn’t know that they can refinance their home loans if they are underwater, meaning they owe more than their homes are worth. The truth is that there are a number of options available for homeowners in this situation through the federal Making Home Affordable program.
Is there anything about mortgages you are confused about? Give us a call – we’ll be glad to help!