I've seen the same myths over and over again for years. The fact is, buying a home is one of the biggest decisions you'll make in life — and it can be overwhelming. That's why we're here to help you debunk some common misconceptions about buying a house. Not all myths are bad, but these are ones that I see over and over again and people get discouraged by them.
1. Need perfect credit
You can still get a loan with bad credit. While having good credit is absolutely necessary to get the best rates and terms on your mortgage, it’s not the only way to qualify for a loan. In fact, most lenders will allow borrowers to apply with less than perfect credit if they have other factors in their favor (like a down payment).
2. You must put 20% down
The truth is, you don't have to put 20% down on certain types of mortgages. You can get a mortgage with no money down, and some lenders will even allow you to put 3% down. This can help reduce your monthly payment and help you get into the home before it's too late.
3. You can only get a loan if you work with the bank
You can get a loan from any bank, but you'll still want to make sure the lender is someone you can trust. The lender will check your credit score, income and employment history, assets, debts and other factors. It's important that you're honest about all of these things so that the lender has an accurate picture of your financial situation.
4. You have to be married to buy a home
You can buy a home with your spouse even if you're not married. If you or your partner are planning on buying a home, be sure to check with your lender to see what kind of documentation requirements they have for non-married couples.
One of the biggest myths about buying a home is that you need to be married. Luckily, this isn't true. There are several ways to legally purchase property as unmarried partners:
You and your significant other could become common-law spouses by living together for at least one year in a state where common law marriages are recognized. This means that you would be able to file joint income tax returns and inherit each other's property after death without going through probate (whereas marrying would require these steps).
Your domestic partnership may also qualify as legal cohabitation in some states; check with an attorney regarding this option before proceeding with the purchase of real estate together.
5. Needing a starter home
If you've ever been told that you need to start small and move up, it's time to throw out that line of thinking. While it may be true for many people, the idea that a "starter home" is necessary is a myth. You can buy a house that is perfect for you, your family and all of your needs.
You don't need to wait until your finances are in order or until you're making more money than ever before. You can buy a house today and have no regrets about it later on down the road when things change.
6. It's best to get the lowest mortgage interest rate possible
There's no doubt that it's tempting to get a low interest rate. But interest rates change. They can go up or down, and even if they're low now, there's no guarantee they'll stay that way.
7. You can count on the government to help you buy a house
Not so fast! The government might be able to assist you with purchasing your dream home, but it's not always a good idea. Government programs come with strict guidelines and can take a long time to complete — and they're not available in all areas.
8. It's best to buy a house in the suburbs, not the city
If you're thinking about buying a home, you may have heard this advice: Buy the suburbs, not the city. It's safer, more family-friendly, and has better schools.
However, it's time to rethink this common belief. Although there are many reasons why it might make sense to buy in the suburbs rather than downtown (aside from safety), these myths should be debunked before you start searching for your dream home.
Safety isn't as big of a factor as people think — studies show that living in urban areas doesn't increase your risk of being involved in violent crime or property crime. In fact, some studies even suggest that living downtown is actually safer than living in the suburbs.
9. Buyers need to have a house inspected before purchasing it
It's true that a buyer needs to have the house inspected before purchasing it, but you don't always need to hire an inspector. In many cases, DIY home inspections are more than adequate for identifying problems with a property.
This is especially true if your home inspection is focused on identifying major issues like structural damage or pest infestations.
An inspector can be expensive — and they aren't always necessary. To decide whether you need an inspection, start by understanding how they work and how they differ from one another.
10. There's no reason to look at houses outside of your price range
Here's the thing: you don't need to look at houses within your budget. You may be surprised what you can actually afford, especially if you're willing to do some research and get creative.
First off, there's no rule that says a mortgage must be for less than 100 percent of the purchase price. In fact, most lenders will consider loans for up to 95% of a house's value.
That means if the asking price is $300k but your lender thinks it's worth $350k (or even $380k), they won't balk at helping you buy it—even if that means taking out an additional loan from another company or family member to cover those extra 5%.
11. More square footage means more home value
When you think about it, it makes sense that bigger homes might be worth more than smaller ones. After all, there's more space to fill with all your stuff. But square footage isn't the only thing that matters when determining a home's value. Location, condition and age are also important factors.
The best way to determine whether or not you're getting a good deal is by comparing similar houses in your area.
For example: If one house has 2 bedrooms and another has 3 but both have comparable locations and conditions, then chances are the three-bedroom will be worth more money than its counterpart (assuming they're both in similar neighborhoods).
12. The listing price equals final price.
A listing price is just a starting point. The real value of a house isn't necessarily reflected in the listing price, so it's important to be aware that it's not always an indicator of what you should pay for a home.
A seller may list their property at a high asking price because they don't want to negotiate or think that house will sell for more than whatever number they put on paper; however, this doesn't mean they won't accept your offer if it's lower than their expectations.
13. Your real estate agent should negotiate for you.
There's a lot of misinformation out there about what your real estate agent does, and this myth is just one example. Realtors are salespeople. They are not lawyers, they are not financial advisers and they certainly don't negotiate for you.
The reason many people see their agents as being able to do all these things is that when you’re buying or selling a house, it can feel like most of your agent’s job involves negotiating with other people: the seller's agent; appraisers (if there's an appraisal); home inspectors; other potential buyers; etc.
And negotiating is important! But the fact remains that your agent doesn't actually have any authority in these situations — they're just making suggestions and recommendations on how to proceed on your behalf.
You should always make sure your own interests are represented as much as possible during every step along the way — from choosing a particular house over another one because it suits your needs better.
14. Buying a house is always better than renting.
Renting a house is sometimes the better option for people who aren't sure about their long-term plans. If you're planning to stay in an area for only a few years, renting might be more financially sound than buying.
Buying a home can cost more money than renting one over time.
Homeownership can be great if you want to put down roots somewhere and build equity in your property; however, it's important to consider all the factors before making such an expensive purchase.
Takeaway
You don't need perfect credit to get a home loan or even put 20% down on one. In fact, you can get a loan with less than perfect credit, or even no money down at all. What's more, you'll be able to find loans at much lower interest rates than you might expect.
Banks and other financial institutions have a lot of different tools they can use to determine your ability to pay back the loan — and they aren't going to turn away someone who has good income and strong income history just because their credit score isn't perfect anymore (or ever was).
One caveat: if there are serious issues with your credit report (like bankruptcy) then lenders will probably require that those debts be paid off before they'll give you financing for buying your next home. But otherwise, if you're ready for homeownership and want reliable financing for it then now is definitely the best time.
Conclusion
And if you’re still not convinced, just remember one thing: buying a home can be one of the most rewarding experiences of your life. You're making an investment in yourself and your family that will last for many years to come, so don't let any myths get in the way.
Comments
Post a Comment