Deciding to purchase a new home can be an exciting prospect (and also a very stressful experience). Once you announce your plans to friends or family, you will likely begin receiving lots of advice on everything ranging from home styles, inspectors and mortgages. While some of the advice you receive might actually serve you well, you also need to be careful of advice that simply isn’t true.
There are many home-buying myths circulating that people still believe, and if you aren’t able to separate fact from myth, you could be missing some vital information that could potentially save you money and help you get the house you want with less stress.
Myth#1: The First Step Is Looking for a House
Looking at houses first might seem like it makes sense but, in actuality, you must first consider many other things before you actually begin looking. This includes researching the area(s) you are thinking about moving to, knowing what you can afford and having some idea of what mortgage you will be trying to get approved for.
For starters, you don’t want to move to a new location blindly. What is the neighborhood like? Is there good shopping nearby? Are the schools good? How far would you have to drive to work? When picking an area, ask all these questions and more to see if the area is actually feasible or not.
Second, know how much you can afford. Additionally, the different mortgages available today can make a big difference in what your monthly payments might be. Speak with a mortgage broker to learn more about your options and what you may be able to afford. Then you’ll be better able to pinpoint which houses fall within your budget, instead of falling in love with one that you can’t afford.
Myth#2: Your Down Payment Must Be 20%
In many traditional loans, this is true, but there are several other mortgage options that require only 5 percent, or even 3.5 percent. However, keep in mind that the less you put down, the higher your monthly premiums will be. You can also take advantage of down payment assistance programs if you qualify.
Myth#3: Your Only Up-Front Cost Is the Down Payment
Definitely not true. You will also be responsible for closing costs, which can vary greatly according to the lender and the mortgage you choose. In some cases, the seller may pay part of the closing costs. The closing costs encompass many items, including attorney fees, title fees and various lender fees. You may also be required to pay for a home inspector and professional survey.
Myth#4: You Can’t Buy a Home if You Have Bad Credit
Many mortgage options have less restriction on credit scores, such as FHA loans. Different lenders might also have more relaxed credit requirements, and sometimes even just explaining why you might have bad credit could help you get approved for a mortgage if the reason is valid. Again, take the time to research different mortgage options so you can make an informed decision.
Myth#5: Getting Prequalified Means You Will Get a Mortgage
A prequalification is really just a piece of paper that lets the realtor and the home buyer know you are serious about seeking a home to purchase. A loan won’t actually be approved until you go through a process with the lender in which all your finances and credit will be more thoroughly scrutinized.
Myth#6: It’s Cheaper to Rent a Home
In many markets this simply isn’t true anymore. Many people choose to rent because they think they don’t have enough for a down payment on a home or they are worried that a bad credit score will ruin their chances for mortgage approval. But the mortgage options today definitely give you a lot more possibilities! Search our website to find rentals or real estate for sale in your area now!