Debunking Myths to Home Buying
Finally ready to make the transition into home ownership? Congrats! In the excitement to get started, we often turn to friends and family for an insight into the process. However, know that there’s a lot of bad information on the internet… and sometimes from friends and family too, as market conditions change and bad information circulates. What are a few of the common myths I hear everyday on the job?
MYTH #1: THE FIRST STEP IS SEARCHING FOR A HOME
You’ve heard the saying, “Don’t put the cart before the horse.” This is incredibly important to remember when it comes to buying a home. You don’t want to start looking for a house until you have gotten to sit down with a lender and discuss what your brokerage can qualify you for. If you fall in love with a house that’s $250,000 and come to find out you’re only qualified for $200,000 you can get your hopes crushed and waste a lot of time. Don’t start the process on the wrong foot and make sure the numbers line up.
MYTH #2: YOU DON’T NEED A REAL ESTATE AGENT
For starts, when buying a home, 99% of the time the buyer’s agent gets paid by the sellers. That random 1% can be for odd circumstances. So you’re getting to use the services of a real estate agent for free. Having a real estate agent on your side means you’ll get to see homes that aren’t as readily available on public searches, you avoid outdated listings and scammers (there are lots of them), and you have protection when it comes to navigating the legalities of contracts and buying a home. Why wouldn’t you want an awesome negotiator working to ensure you get the best from the transaction — at no cost?
MYTH #3: YOU CAN’T BUY A HOME WITH BAD CREDIT
Fortunately for some, this is a myth. Lenders and banks come by the hundreds of thousands and all though there are a few loan options, a lot of lenders can work with credit scores down to the low to mid 500’s. Allow me to introduce you to a qualified lender who can review your individual circumstances and see if you can qualify. There are a lot of factors that go into approvals, but your credit doesn’t have to be a sore thumb during the process. However, better credit scores can get you a better interest rate — talk to a professional to learn what impacts your credit and how you can steadily improve it if you’re preparing to buy a home.
MYTH #4: YOUR DOWN PAYMENT HAS TO BE 20%
Think you have to sell an arm and a leg to buy a home? Not at all! An FHA loan only requires 3.5% while a conventional only requires 5%. There are a lot of programs that can potentially help you with down payment assistance or be 0% down mortgage. USDA and VA loans are the most popular 0% down programs. If you qualify, this can take a big chunk off the amount of cash you have to bring to the closing table.
MYTH #5: DOWN PAYMENTS ARE THE ONLY UPFRONT COST
This is one of the biggest misconceptions. There are several costs that go into buying a home, and that includes upfront costs including your inspection. Aside from your down payment, you then have to pay for closing costs (lender costs, transfer taxes, title company fees, etc). These are not the same thing. Closing costs can range anywhere between 2-4% of the purchase price. In some markets or situations, these can be negotiated for sellers to cover by rolling into the offer price — however, it’s not always the smartest negotiating tactic to land your dream home, so discuss your best strategy with your agent.
If you’re interested to discuss more, get in touch! Buyer consultations are completely complimentary, ZERO-pressure and are meant to empower you with knowledge. #TheMoreYouKnow