B4-U-BUY(tm) FYI - The Truth About Buying Your Own Home

The Truth About Buying Your Own Home

Now is a great time to buy a house. The economy is stable, interest rates are down and there are more programs than ever to help people make deals with low down payments. Unfortunately, many people don't pursue the dream of owning their own home because they have misconceptions about the house buying process. Here are just a few:

I need a 20 percent down payment.

Saving the traditional 20 percent down payment has been the greatest barrier to homeownership. But if you choose to use mortgage insurance, you can buy a house with as little as a three to five percent down payment.

For example, the median home price in the U.S. is $116,000. To make a 20 percent down payment, you need $23,000. To make a five percent down payment on an insured loan, you need just $6,000. Mortgage insurance works by protecting the lender against part of the loss if the borrower stops making mortgage payments. Loans with mortgage insurance are widely available. They've helped more than 15 million home buyers get over that down payment hurdle.

The home-buying process is too complicated.

Shopping for a home doesn't have to be an intimidating process. You can take advantage of home buyer education courses that cover everything from basic steps to buying a house to the financial responsibilities of owning a home. Lenders and mortgage insurers work with community groups to make these programs available across the country. Plus, the mortgage industry offers follow-up programs to help you keep your home if, for example, you fall behind on payments because of a job loss or medical emergency in your family.

It's too hard to qualify for a mortgage.

It's easier than you might think. Even if you make less than a 20 percent down payment, the qualification requirements are generally the same. Basically, you need to provide evidence of your income and history of managing money. In some cases you may not need a formal credit history. Instead, you can use a record of on-time rent and utility payments to show you're a good money manager.

I don't make enough money.

If you're a lower-income, first-time home buyer, you may be eligible for special programs that make it possible for you to buy a house with as little as a three percent down payment. These programs involve partnerships with local community groups and are tailored to community needs. They feature education programs that help you learn about the home buying process and post-purchase counseling to help you keep your home if you run into financial trouble. They also offer options in such areas as down payment, mortgage insurance premium and credit verification.

Don't let misconceptions about home buying keep you from enjoying the benefits of homeownership. The mortgage insurance industry has an excellent resource available-a free brochure called "How to Buy A Home With a Low Down Payment." You can get a copy by writing to the Consumer Information Center, P.O. Box 100, Pueblo, Colorado, 81002. (NAPSI)

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