Here are some of the most common misconceptions about home buying :
Myth #1 – The first step is looking for a house
Perhaps you just want to get a feel for the area and have something in mind before you sit down with a Realtor. But, even if you think you are just browsing, you run the risk of setting your heart on something.
A buyer might be viewing homes that are in a higher or lower price range than what they are qualified for. Browsing is always fun, but when it comes down to it, you need to make sure your credit is in good shape. Also, don’t forget to get pre-approved for a mortgage before you embark on your journey. This will determine what your budget is.
Myth #2 – A 30 year mortgage is the best option
If you think that the longer you agree to invest in your home, the cheaper the mortgage payments will be, think again. Most people opt for a 30 year mortgage because monthly payments are lower than its 15 year counterpart.
Consider this : You could end up paying more during the life of the loan if you pick the 30 year mortgage option instead of the 15 year mortgage. That’s because, with a 30 year loan, you’re borrowing the same amount of money for twice as long at a higher interest rate.
Just remember to keep an open mind toward other loan plans, including an adjustable rate mortgage. If you aren’t set on staying in your home for the long haul, this could be the ideal mortgage for you.
Myth #3 – Your down payment must be 20%
A 20% down payment is ideal if you want to avoid the private mortgage insurance. But many lenders will be glad to offer up home loans with 10% or 5% down – as long as your willing to foot the monthly bill. If you qualify, you can skip the conventional loan and receive a government backed loan from the Federal Housing Administration.
In fact, there are many options for down payment assistance. While many programs are geared toward low-income home buyers, you don’t have to be destitute. There are lots of ways you can qualify for help on the local or federal level.
Myth #4 – The only up front cost is a down payment
For one thing, the seller might determine you’re responsible for closing costs, which can be anywhere from 3% to 6% percent of the purchase price – and those costs can change depending on your state. Don’t forget about the fees, taxes, and other costs for inspections, credit reports, and insurance.
Myth #5 – You can’t cant buy with bad credit
If you’re looking to get a conventional loan, having bad credit might give you a full stop. FHA loans require only a 3.5% down payment and borrowers with low credit scores can qualify. Keep in mind, FHA loans may look great at first, but they aren’t for everyone.
Myth #6 – You don’t need a home inspection
You might be tempted to believe this, especially if your housing market is hot and you’re worried that your dream home could be sold to someone else who waives the home inspection. But beware : Sellers are banking on you skipping this crucial step. It means you’ll get the home as is, including any and all problems that come with it. Sometimes those problems aren’t visible. In the long run, just spend the money for a thorough inspection because it can save you a lot of time.
Myth #7 – The asking price is set in stone
The offer you make on a house does not need to be the asking price. If you have great credit, pre-approval and a down payment ready to go, sellers might be more willing to negotiate than wait for another buyer to come around. Plus, if your home inspection turns up issues, you can use those to your advantage in your negotiations.
Myth #8 – You don’t need an agent
You might think that you can do this home buying thing solo. But, we strongly suggest you use a realtor. They are pros who bring expertise to the table and have tools to see the things you can’t. Trust us – they know more than you do!
Myth #9 – Schools don’t matter if you don’t have kids
You love the house, it’s in your price range, and you want to move fast. But there’s more to it than that.
The neighborhood you choose matters – both now and later when you might consider selling. Even if you don’t have children, good schools are a sign of a good neighborhood. Also, check out the area’s walkability, your commute to work, and any other features that would make the neighborhood a good fit for your lifestyle.
