Buying a home for the first time is a huge step that most of us encounter when Life dictates it. Whether it’s a job change, or a marriage, or having children; taking that next step in the Adulting Sweepstakes is an important one. As such, there are a lot of myths and detractors spouting off these myths when it comes to purchasing your first home. We’ll take a look at ten of these home-buyer myths and break it down for you.
- The Real Estate Market Is Not Conducive For Buying A Home Right Now
The Real Estate market is a tricky one to predict. Trying to time the market is a fruitless endeavor because of the many variables involved. If you wait until the market is on a downward swing, you may be waiting a while. And while you’re waiting, you’ll be paying rent to a landlord instead of making payments on a house you own.
- Rent Is Less Expensive Than Owning Your Own Home
When you break down the numbers monthly, that statement seems to be true at first glance. However, when you factor in all of the nuances of home ownership versus being a renter, you’ll start to see the difference between the two. Mortgage payments are fixed at a set amount and don’t change whereas Rent will go up over the same time period. Also, the fact that you actually own your property versus renting it from someone else should trump any of this talk right then and there.
- You Need a 20% Down Payment To Purchase a Home
The reason for this supposed myth is due to Private Mortgage Insurance. When you finance a home with less than 20% down, you also have to pay PMI every month until you reach the required Equity of 20%. That’s true of regular conventional loans, but not for FHA (Federal Housing Administration) loans which can go as low as 3.5% Equity. There are also VA (if you’ve been in the Military) loans available as well to get below the 20% threshold.
- You Should Be Debt-Free Before Purchasing a House
Being Debt-Free is a great thing, but let’s be honest, most of us aren’t. Between Credit Cards and other bills, most have some form of monthly payment to deal with. If you’ve been responsible and not missed any payments, chances are fairly good that your Credit score is good enough to get a Home Loan. Instead of using your extra money to pay off debt, you could save that for a down payment on your first home.
- Being In a Good School District Doesn’t Matter If You Don’t Have Children
This is a big one, and it’s a simple premise to shoot down. Better School districts tend to be in good neighborhoods, read: great return on investment. If you ever wanted to sell your $100,000 house in another 20 years, how great would it be if it was worth $200,000?
- If Your Credit Is Bad, You Can’t Get Financing
As previously mentioned in #3 above, there are plenty of different outlets than offering low-credit lending. FHA loans are ideal for buyers who fall into this category.
- Home Inspection, Sc’home Inspection…..You Don’t Need That!
Actually, you do need a home inspection because you don’t know what lies beneath the surface. Cracks in the foundation? Sewer issues? Is the Electrical system up to Codes? All of these issues are not out in the open when you sign on the dotted line. And all of those issues will be a big punch to the checkbook if they’re not dealt with beforehand.
- 30-Year Mortgages Are Your Best Bet
The monthly payments for 30-years are lower but you also pay out twice as much interest over the period. There are other options out there, like a 15-year mortgage or an ARM (Adjustable Rate Mortgage); it’s all relative to what your situation is.
- Real Estate Agent? Who Needs That?
You may think you’re coming out ahead by cutting out the Commission to the Agent. But think about this, That Agent will bring tools that you don’t have access to. Namely, computer databases to search for a good location and a good deal. Access to quality home inspectors and negotiating with the Seller, that’s a lot of leg work for one person to tackle.
- You’re Only Paying The Down Payment Up-Front, Nothing Else
This is a false myth, you’re also on the hook for fees, inspections, credit reports, insurance, taxes, etc. In some cases, you may also have to pay on closing costs as well.
As you can see, there is a lot of misinformation out there when it comes to home ownership. It pays to research and do your due diligence on these matters. Happy House hunting!