Most everyone has a parent, aunt, uncle, cousin, co-worker or friend who owns their home and is full of advice that you should follow. Listen to them and you’ll derail your dreams by believing a lot of myths. Truth be told, there’s a lot of misinformation out there about buying a home and you also must consider that Uncle Joe bought his house 40 years ago… when some of these things might have been true! Read on to distinguish fact from fiction.
Buying Is Always a Better Deal than Renting
The keyword here is “always”; there are pros and cons to both options. As a renter someone else is typically responsible for routine maintenance and repairs, homeowners have, and must plan for, this expense. Also, depending on the area where you live, home prices could be well out of reach. For example, if you live in a community that survives on tourism, wages may be low compared to the high prices second homeowners are willing to pay for property and it could price you right out of the market.
Your Credit Must Be Perfect to Buy a Home
While you need to have fairly good credit, it doesn’t need to be pristine. A lender will consider many factors when determining a loan approval; income, debts, assets and employment history. If you’ve been able to establish a solid savings history, paid down any revolving debt (credit cards) and have been at your job for a significant amount of time, a lower credit score won’t automatically result in a denial. Most lenders; however, want to see all collection accounts paid in full. Review your credit before you talk to a lender. You can get it for free from Credit Karma.
You Must Have Enough Savings for a 20% Down Payment
This was true 40 years ago but now there are many loan programs available for first-time home buyers with down payment requirements as low as 3%. Some government backed loans are 0% down; such as Rural Development and VA loans.
The Only Funds You Need Are for the Down Payment
This is the furthest thing from the truth; the home buying process can be costly. You’ll have some out-of-pocket expenses such as the loan application fee (if there is one), home inspection, appraisal and closing costs. Do your research and know what the average cost for these expenditures might be in your area.
The First Step in the Process is Looking for a House
No! No! No! You don’t want to start looking for houses until you have gotten a pre-approval from a lender and you have the funds available to complete the transaction. The last thing you want to do is to go house hunting and fall in love with a home you can’t afford or get financing for. Meet with a lender first, find out what your price range is and get a pre-approval.
A 30-year Mortgage is Your Best Financing Option
The reality is that “cash is King”; however, most people don’t have that capacity. A 30-year loan may be what’s most affordable for you but you can still check out loans with shorter terms to save yourself paying a whole lot of interest.
Skip the Agent and go Straight to the Internet
If you want to lose out on your dream home this is a great plan, if not, utilize the professional services of a Realtor. They’re the pros who bring their expertise to the table. Not just negotiating the offer but they will also guide you through the entire process.
Start Looking for Homes in the Spring
It’s true that Spring is the most active time in the real estate market as both buyers and sellers will be preparing for the summer moving season. House hunting in the fall and winter might save you some money when you are competing with fewer buyers which should hold prices down.
Buy the Worst House in the Best Neighborhood
Location! Location! Location! Searching for a low-priced steal in a high-priced zip code isn’t always the best game plan. If the cost to make a house livable is sky-high or if it has too many drawbacks that can’t be fixed such as being located by the interstate or a noisy business, then it’s not really a “good deal”.
Schools Don’t Matter if you Don’t Have Children
It does matter – both now and later when you might want to sell the home. Even if you don’t have children, good schools are a sign of a good community; the next buyer may be willing to pay a premium to be in your district.
Cash Buyers Always Get the Deal
Of course sellers love the simplicity of a cash buyer but it’s not a guaranteed winner. Buyers can still outbid an all cash offer and have a shot at nabbing the house.
You Don’t Need a Home Inspection
While many lenders might not require you to have a home inspection done, don’t short change yourself and skip this step. Regardless if it’s to save a few bucks or if you’re worried your dream home could be sold in a split second to someone else who waives the option. There are so many things a professional can find that you’ll want to address before you’re the official owner of the home. Skipping this step is almost always a mistake.
Your Offer is Set in Stone
Just because the seller accepts your offer doesn’t mean it’s a done deal, there are still many things that can unravel the transaction. For example, if issues show up during the home inspection or the appraisal of the home doesn’t come in high enough.
The Home Buying Process is Complicated
It doesn’t have to be! Mortgage applications can now be done on-line and correspondence with your lender can be electronic as opposed to in-person so you shouldn’t have to take time off from work or worse, drag your kids to the bank. There’s a wealth of information on the internet but also from your local professionals who want to help you through the process, let them.
Our Agents are always happy and ready to help you should you have additional questions or happen to be ready to proceed with your home buying needs. Call us at 603.726.4580 or you may reach out to us via firstname.lastname@example.org