Buying a home should be an exciting time in your life, but don’t believe everything you hear. Here are some common myths that I hear as a REALTOR®.
1. You need to save 20% for a down payment
There are many loan programs available that offer 97.5% to 100% financing options, meaning you will have little to no down payment. Find a reputable lender to discuss the different loan programs available, and which will work best for your situation.
2. The first step in buying a home is to start looking for one
While it is tempting to start the home buying process by looking for your new home, the first step should be to find a lender and become pre-approved. This will help you know how much you can afford and find the right loan product that works for you. Without a pre-approval letter, sellers will not consider your offer, and you could potentially lose out on your dream home.
3. I don’t need to use a REALTOR®
Would you go to court without an attorney? Probably not. A reputable REALTOR® will have experience, negotiating skills, and access to off-market properties. Also, it is a free service to the buyer, as the seller typically pays their commission.
4. I can save money by not using a REALTOR® when buying new construction
Many people do not know that the on site agent represents the builder in a new construction contract. This means, that you will be unrepresented unless you find a reputable REALTOR® to represent you. Also, many times, a REALTOR® can negotiate the price for you.
5. Renting is cheaper than buying a home
Though there are some upfront expenses for buying a home, if you plan on living there for 3 or more years, it can be beneficial. Fixed payments, building equity, and potentially saving on your taxes just to name a few.
6. I only need enough money for a down payment
While you will need money for a down payment if you do not go the 100% financing route, there are additional costs to think about. Earnest money, inspection fees, appraisal fees, and closing costs. Discussing these upfront with your REALTOR® will give you an idea on how much you should have before starting the home buying process.
7. Spring is the best time to buy
Consider buying in the fall or winter months, as there are usually less multiple offer situations and sellers may be more apt to negotiate.
8. Shopping around for lenders will hurt my credit score
Different lenders typically offer similar loan products, however, they will have different rates and fees they charge, so it’s important to know your different options. Lenders will do a hard credit pull, but since it is the same type of application, your credit will not be hurt as long as it’s within a 30 day period.
9. I can buy new furniture on credit the day before closing on my new home
Buying a new home is an exciting time, but buying anything on credit should be avoided until the final paperwork is signed. Lenders will pull credit again right before closing, and new credit lines could prevent you from closing.
10. It’s new construction, I don’t need to pay for an inspection
Never skip an inspection on any type of house. Just because it’s new, doesn’t mean its perfect. Contractors make mistakes and things get missed. It is better to spend a couple hundred dollars than to get in your new home to find something you weren’t aware of, and spend thousands to try and fix it.
Don’t let myths stop you from buying a home. Now is the perfect time, you just have to start the process.
“A journey of a thousand miles begins with a single step.” Lao Tzu