Common Misconceptions to Buying a Home

Are YOU finally ready to make the transition into home ownership?  That's awesome!  This is an exciting time to turn to friends and family for insight into the process. However, there seems to be a circulation of misconceptions spreading around, so we are going to take a moment to help clear these up.

1. THE FIRST STEP IS SEARCHING FOR A HOME

I'm sure you're familiar with the saying, "Don't put the cart before the horse." These words ring true when buying a home. You don't want to start looking for a house until you have gotten to sit down with a lender and discuss what the bank will qualify you for. If you fall in love with a house that's $300,000 and you come to find out that you are only qualified to purchase up to $200,000, you can get your hopes crushed and waste your time. The first step is to get pre-approved with a lender you know and trust. If you don't have a lender, ask your real estate professional and they will have recommendations for you.

2. YOU DON'T NEED A REAL ESTATE AGENT

When you are the one buying the home, 99% of the time the buyer's agent gets paid by the seller. Therefore, these services are free to the buyer. When you have a real estate agent on your side, this means that you will get to see homes that aren't as readily available on the public searches, you avoid outdated listings, and you have protection when it comes to navigating the legalities of contracts and buying a home.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 for FREE?  Would you go to court without a lawyer?  Then, don't go into the biggest purchase of your life without a professional who will advocate on your behalf for the entire process of buying a home. 

3. YOU CAN'T BUY A HOME WITH BAD CREDIT

Fortunately for some, this is a myth. Lenders and banks come by the hundreds of thousands and all have loan options. Many lenders can work with credit scores in the 500's. Get in touch with an agent to help connect you with the right lenders who can assist you to get potentially approved. There are many factors that go into approvals, so don't let your credit stop you from getting the process going. Even if the lender can't get you approved now, they can give you a road map that will help you get approved in the next 6 months to a year. Better score = better interest rate.

4. YOUR DOWN PAYMENT HAS TO BE 20%

If you think you have to put down 20%, then you're wrong!  An FHA loan only requires 3.5% down while a conventional loan only requires 5% down. There are also many programs that could potentially help you with down payment assistance or be a 0% down mortgage. 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 COST

This is one of the biggest misconceptions. There are many costs that go into buying a home and that includes upfront costs. One mandatory cost is the home inspection and the other is the home appraisal. A home inspection is imperatitve to know exactly what you are buying. If you are financing the home with a mortgage, the home will have to appraise.  Inspections can cost anywhere from $300-$600 and appraisals can cost anywhere from $300-700. You are also responsible for paying for closing costs in addition to your down payment. Closing costs are usually 3-6% of the purchase price. Sometimes, these costs can be negotiated for sellers to cover by rolling into the offer price. Your agent can guide you if this is a viable option depending on your loan type and the area you decide to purchase in. 

Now that you have some knowledge to get the process going, get in touch with an agent who will help you get through the process as smoothly as possible.