Buying a home certainly seems like can be a long and daunting process, it doesn’t have to be. With a plethora of information, we have access to in 2019, it can get hectic figuring out what’s true and not true. We are here to clear up the top 10 myths associated with the home buying process.
#1: You need a 20% down payment to buy a home.
No, this is the most common misconception in the home buying process. There are many options for loan programs that are geared to help you get into a home with less than 20% down, and some even up to zero down.
#2: Renting is always cheaper.
Not always, in many housings markets, rent has consistently increased over the past 20+ years. Renters are often left paying over half of their gross income on their rent, leaving little left for savings. When purchasing a home, you will not have to worry about rent increasing and will build your equity in your home over time.
#3: If you want to buy a home, your credit will need to be flawless.
Your credit doesn’t have to be perfect, but it does have to be good. There are a lot of other factors that can be taken into consideration when deciding whether you’ll be approved for a loan, and there are many different loan programs for non-perfect credit scores. Sometimes, when first-time homebuyers try to fix their credit on their own, they can end up doing more harm than good. It’s best to speak with one of our knowledgeable mortgage professionals before you try to repair your credit on your own.
#4: You don’t need a real estate agent.
As the buyer, you don’t pay any of the realtor fees, the sellers do. That said, it is important to have someone to advocate on your behalf. We suggest interviewing at least a few agents before making a final decision. Do plenty of research to make sure they will be a good fit for you and what you are looking for. After all, you are making one of the biggest purchases of your life.
#5: You should pay off all your debt before buying a home.
It might be a good idea to pay off all your debt, but it might not be, depending on your circumstances. If your credit scores are good and you have plenty of income for the loan you need, it might be better to conserve cash and use it for your down payment. Again, consult one of our mortgage professionals to set up a plan for all of your debt that fits with your financial goals.
#6: Find a home first, then worry about financing later.
No, this is a very painful lesson for many first-time buyers who fall in love with a home only to learn they can’t qualify. That’s why it’s important to talk to one of our mortgage professionals before you start the process of buying a home.
#7: A 30-year loan is the best option.
There are several different term options for you buying your first house, and the best one is the one that fits into your short term and long term financial goals. Remember, the wrong loan can end up costing you thousands of dollars over the life of it. Just another reason to consult with us before starting the home buying process.
#8: The only upfront cost is a down payment.
No, not only do you have your down payment but don’t forget the fees, taxes, and other costs that include inspections, credit reports, insurance, and other things that all add up.
#9: Getting pre-qualified is the same as getting pre-approved.
False, a pre-qualification is just an estimation of how much you will likely be approved for but there are no guarantees. Pre-approval means you’ve verified proof and received a letter from a lender that states your approved loan amount to purchase a home.
#10: Your offer is set in stone.
Just because the seller accepts your offer doesn’t mean it’s finished, there are still many things that can still happen in the transaction. Between getting your offer accepted and closing, you’ll get an opportunity to inspect the property, learn the fair market value of the property, and perform your due diligence. Some items can be renegotiated with the seller, and if you’re not happy with the results, you can terminate your offer and continue shopping.
Don’t let home buying myths stop you from buying a home. Consult with an expert and configure a clear plan to homeownership.