Important Home Buying Myths to Avoid

Sometimes the thought of buying a home can be intimidating and may also feel out of reach and unattainable. For whatever the reason, homeownership can actually be easier than expected. Below we highlight some home buyer myths you may want to ignore.

You have to put 20% down

Yes, some loans require you to put 20% down but depending on the qualifications...you may actually be able to purchase a home by putting down a lot less! Some loans will even allow you to put down as little as 3.5% down. Also, depending on the location, some rural housing loans even allow buyers to obtain 100% financing.

These can be great opportunities for first time home buyers that can not afford a large down payment, closing cost, and inspections. If you are unsure, it's always a good idea to talk with a reputable lender in your area to find out what loan options are best for you.

Your credit score has to be excellent

Some people believe that they can't buy a home because they have no credit or their credit score is too low. Having a great credit score is of course ideal when buying a home. But, just because you have a lower than expected credit score, doesn't mean you can't become a homeowner. You may actually be closer than you think to being pre-approved.

You would be surprised how fast you can improve your credit score with the proper game plan. Surprisingly, you may only be a couple months out from being able to qualify.

You have to buy what your pre-approved for

You just spoke to a lender and finally got pre-approved. Congratulations! Depending on what your projected monthly mortgage payment will be and what your current budget is, you want to be careful that you don't overextend. For an example; just because you were preapproved for a $300,000 home doesn't mean you have to buy a home listed for that price.

As a homeowner, there are times when appliances go out and things need to be replaced. When this happens, this can suddenly stretch your budget and the next thing you know you find it difficult to make the next mortgage payment.

It's cheaper to rent than to buy a home

Which is a better fit for you? Buying a home and maintaining a property can be a big financial commitment and it can also be very time-consuming. However, the benefits of homeownership can be very rewarding. Homeowners over time tend to reap the rewards of appreciation and sometimes even apply the equity of there first residents towards their second home. Making their second home an easier purchase.

Depending on your situation or the city you live in - renting may or may not be cheaper than buying a home. If you find yourself traveling for work or relocating often, renting may be a better fit for you. If you find yourself at a property for three to five years or even longer than buying a home may be a better financial decision.

Down payment is your only upfront cost

One of the most misconceptions of buying a home is that you only need enough for the downpayment. When buying a home you need to be prepared for additional expenses outside of the down payment. Likely the second largest expense is the closing cost. This can usually cost around 2-3% of the purchase price. However, sometimes you can ask the Seller to pay some closing cost up to an agreed amount. Other expenses when buying a home can include you common inspections. Some of the most common are your basic full home inspection, termite inspections, radon inspection, and even a septic Inspection.

You'll get a better deal using the Listing Agent

Typically buyers believe that if they go through the listing agent directly they can get a better deal. This is not always true. Typically the Seller and the listing agent have already agreed on a cost to sell the home. Also, you do not know the current relationship between the Seller and agent so it is beneficial to have your own representation when buying a home. Outside of the initial offer, there are other negotiations that take place during a transaction. So having an agent in your corner can help make sure things are done in your best interest.

Keep in mind, there can also be a conflict of interest when dual agency is the case because now the listing agent has a larger financial interest in the deal when they are representing both sides. 

Conclusion

Many people turn to the internet now when they are looking for an answer. Be sure to do your own research when buying a home and educate yourself on the process. Just because you may not be ready to purchase a home today, doesn't mean you can own a home soon. Talk to a local agent or get in touch with a reputable lender to get a game plan for getting preapproved.