Myth: It's better to buy than rent a home. Buying a home is often a good way to fix the long-term costs of shelter. On the other hand, renting may make sense if.

• You don't plan to live in the house for more than three to four years (you won't likely earn back your closing costs).
  
• Area home prices have gone up excessively in the last few years (suggesting they may be due to stall or drop).
   
• Interest rates are high or rising (making it difficult to make the higher payments) or are high relative to price appreciation.
  
• You can invest the down payment and the difference between the monthly cost of renting and buying for a higher rate of return than what the home would earn.
  
• You can't afford regular maintenance and repairs, or rising real estate taxes or insurance costs.
  
• You are in and expect to remain in a lower income-tax bracket (making the tax breaks less beneficial to you).

Myth: Homeowning beats inflation. In certain fast-growing markets, home prices may outpace inflation. However, most homes in most markets generally will stay even with inflation, say housing experts, especially as long as interest rates stay low. While a home may be one of the biggest financial investments you'll make in your life, and the financial aspects are important, most people should buy a home because it's where they want to put their family's r pots down, not because it's a "hot" investment.

Myth: You need a lot of money to buy a home. While certainly not everyone can afford to buy and maintain a home, the majority of American families can. Lower-income home buyers can start out with a modestly priced home, apply for a state low-income program for first time buyers, or rent to own through Freddie Mac (Federal Home Mortgage Corp.)

Myth: You need 20 percent for a down payment. That's standard, but you can get lower down payments. The Federal Housing Administration (FHA) requires as little as three to ten percent down, depending on the price of the home. Military veterans can often get a Veteran's Administration (VA) loan for nothing down. The seller may be willing to carry the mortgage with a smaller down payment. Or you may be able to swing a combination: 80 percent from the bank, a 10percent carry by the seller (preferably for only 5 or 10 years) and 10 percent down.

Although lower down payments mean higher monthly payments and mortgage insurance, saving for a 20-percent down payment is often too big a hurdle for many buyers. Finding a lower down payment may be worth the effort.

For a free brochure called How to Buy a Home With a Low Down Payment, write the Consumer Information Center, PO Box 100, Pueblo, CO 81002.

Myth:You need mortgage insurance. Not if you pay 20 percent or more down. However, if you pay less than 20 percent down, the lender will almost certainly require it. Mortgage insurance covers some of the lender's loss in the event you default on the loan. Be aware, however, that you usually can drop the mortgage insurance once you reach 20-percent equity. Unfortunately, mortgage companies often don't notify homeowners that they can cancel the insurance once this threshold is reached.

Myth: Always use a real estate agent to buy. Actually, a real estate agent works for the seller, not the buyer. Many home buying experts are recommending that buyers shop for a home with the help of a buyer-broker, who works for the buyer.

Myth: A 30-year fixed mortgage is almost always best. The choice of mortgage depends a lot on your personal financial circumstances. An adjustable rate mortgage may be a better choice if interest rates are currently high or you need the lower rate initially so you can afford the payments (but anticipate increased income as the interest rates rise). Or a shorter-term mortgage such as 15 or 20 years may make sense because you can save thousands of dollars in interest charges.

Myth: It pays to prepay a mortgage. Paying extra principal each month-even as little as $25 or $$50-can save thousands of dollars in interest charges. On the other hand, you may actually come out ahead by putting that extra principal into a high-earning retirement account. Also, prepaying is of less benefit the lower the interest rate on the mortgage and the higher the tax bracket you're in (because of the tax deductions).

August -30- 1997