Before you officially change your status from “renter” to “homeowner,” it’s time to put some serious thought into the future. If you are unknowledgeable about owning a home, it may be tempting to consult friends and family for guidance.
Unfortunately, advice backed by good intentions may not be ideal for your current situation.
Fortunately, however, we’re here to shed light on the common misconceptions of home buying and how to do it safely and efficiently.
Myth 1: You have to look for a house first.
Many people dive right into house searching by doing just that: searching. Searching leads to desire, and desire does not always conform to budget restrictions. The more searching that is done, the more likely it is the buyer will find a home that is not in their ideal price range.
Connie Antoniou, a broker in Illinois, warns against this very practice: “a buyer might be viewing homes that are in a higher or lower price range than what they are qualified for.”
Before the browsing begins, it is important to check that your credit is high enough to make the process as painless as possible, and it is also important to get pre-approved for a mortgage before any other steps are taken.
Myth 2: A 30-year mortgage is ideal.
A longer mortgage doesn’t necessarily equate to cheaper payments.
While the monthly payments for a 30-year mortgage are cheaper than a 15-year mortgage, you actually end up paying more over time. This is because you’re essentially receiving the same loan, but for a longer time and with a higher interest rate.
Samantha DeBianchi of DeBianchi Realty in Florida states that: “If you’re more focused on paying down the house versus the interest, a 15-year option is great.”
While a 30-year mortgage is not the end of the world, there are other methods to pay your loans off in a shorter amount of time, such as an adjustable-rate mortgage. If you don’t plan on staying in your home for the rest of your life, this option is ideal for you.
Myth 3: You must make a 20% down payment.
If you want to forego private mortgage insurance, then a 20% payment is ideal. However, if you are willing to pay the monthly bill for the insurance, many lenders will allow a down payment as low as 5% or 10%. The Federal Housing Administration also offers loans as low as 3.5% to those who qualify.
For those who are unaware, there is a plethora of options to make down payments easier. Many programs are intended for potential homeowners with a low income, but there are plenty for those of greater economic status.
Myth 4: Down payments are your only initial expenses.
Unfortunately, there is the possibility of being responsible for closing costs, which can be a whopping 3% to 6% of the entire purchase price, and they could be higher depending on the state you reside in.
Fees, taxes, and various other costs are all also a part of the buying process, much to the dismay of the customer.
Myth 5: You need good credit to buy a home.
While regular loans require good, and sometimes stellar, credit to be approved, government-backed FHA loans are available even to those who have a credit score less than 600; all at a 3.5% down payment, no less. While on paper FHA loans may seem like a godsend, they are not always the best option.
Myth 6: A home inspection isn’t necessary.
This is a common belief among new homebuyers. Many also fear that someone who waives the home inspection may also be prioritized as a buyer.
Deceptive sellers who like to prey on those unaware buyers that will forego an inspection. If they make the mistake of doing so, they will receive the home in whatever quality it is in at the time of purchase. Subsequently, they will be left on their own to fix any issues the home may have. DeBianchi states that one should spend the money for an inspection, because “in the long run it can save you a lot of money and time.”
Myth 7: The asking price is non-negotiable.
Similar to buying a car from a dealership, you are able to make an offer that is less than the asking price. Good credit, pre-approval, and a solid down payment are all characteristics of a buyer that may entice the seller to negotiate.
Furthermore, if you chose to have a home inspection performed on the property, you could use any issues as leverage in asking for a lower price.
Myth 8: You don’t need an agent.
Many buyers are reluctant to spend money on an agent when there is a vast sea of information about home buying on the Internet.
Those thoughts need to be put to an abrupt halt; it is very important to hire a realtor to help you with the buying process. After all, that’s exactly what they’re paid to do. Plus, they have a lot more tools at their disposal than the average human, and they will use them all to find you exactly what you’re looking for.
Myth 9: If you don’t have kids, you don’t need to worry about schools.
Once a house within a budget is found, many people want to move in right away. The neighborhood you live in is important, however. Good schools are a staple sign of a good neighborhood. Walkability, traffic, and landmarks are all important when choosing the area you move to; make sure you move into one you’ll still want to be in ten years from now. For more information, [Click Here].