Debunking Myths To Home Buying
Are you finally ready to make the transition into home ownership? That’s awesome, and in this exciting time, you can be turning to friends and family for an insight into the process. However, there seems to be a circulation of misinformation spreading around, so let’s clear up a few debunking myths to home buying.
1. The First Step Is Searching For A Home
You’ve heard the saying, “Don’t put the cart before the horse,” well that’s important to remember when it comes to buying a home. You don’t want to start looking for a house until you have discussed with a lender what the bank will qualify you for. If you fall in love with a house that’s $350,000 and come to find out you qualify for $250,000 you will get your hopes crushed and waste a lot of time. Don’t start the home buying process on the wrong foot…make sure the numbers line up first.
2. You Don’t Need A Real Estate Agent
For starters, when buying a home, 99% of the time the agents on both sides of the transaction get paid from the Seller’s proceeds of the home. That random 1% can be for odd circumstances, such for sale by owner (which is for an entirely different post!) So you’re getting to use the services of a real estate agent when you are on the buy side, while their commission comes from the listing side. 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estate agent on your side means you’ll get to see homes that aren’t as readily available on public searches, you avoid outdated listings and scammers (there are lots of them), and you have the protection when it comes to navigating the legalities of contracts and buying a home.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!
3. You Can’t Buy A Home With Bad Credit
Fortunately for many, this is a myth. Lenders and banks come by the hundreds of thousands and although there are a few loan options, a lot of lenders can work with credit scores down in the low to mid 500’s. I happen to have terrific lenders that I work with, who have many times worked with my clients who have been told by other lenders they don’t qualify for a loan. These lenders have found them loan programs and made them homeowners! Get in touch with me and I’ll connect you with the right lender who can help you potentially get approved. There are a lot of factors that go into approvals, but your credit and credit score doesn’t have to be a sore thumb during the process. However with that being said, the higher your credit score, typically the lower your interest rate.
4. Your Down Payment Has To Be 20%
If I only had a nickel for every time I’ve heard this statement. Think you have to sell an arm and a leg to buy a home? Not at all! An FHA loan currently requires a 3.5% down payment, while a conventional loan can require just a 3% down payment in some instants. There are a lot of programs that can potentially help you with down payment assistance or be 0% down payment. 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.
5. Down Payments Are The Only Upfront Costs
This is one of the biggest misconceptions. There are a lot of costs that go into buying a home, and that includes upfront costs. One of the mandatory ones is an appraisal. If you are getting a mortgage, the home will have to appraise for at least purchase price. Most home buyers also like to know the condition their home is in, so a home inspection and termite inspection are must have items as well. Home inspections depending on the Sq. Ft. of home and a few other factors, normally start around $350 and go up from there. A termite inspection can range between $40-$100. An appraisal can range from $450-$650 and up. Aside from your down payment, you then have to pay for closing costs. And NO, they are not the same thing. Closing costs can range anywhere from 2-5% of the purchase price. In certain markets, this can be negotiated for sellers to cover, but whether that decision is smart to do or not when it comes to landing your dream home will need to be discussed with your agent and lender and what the current market conditions are at that time.
Now that you have some knowledge to get the home buying process started, get in touch with me and I’ll navigate as smoothly as possible a path for you to owning a home of your own!