There is no one way to buy a home. Different people have their own takes to the process. One thing remains constant, however, and that’s the presence of home buying myths.
These misconceptions can hold you back from moving forward with your home purchase. You might even miss out on a good deal. To help you make informed decisions, here is a list of busted home buying myths that you should know.
- You need to make a down payment of 20 percent
While a 20 percent down payment is ideal, it isn’t the standard. There are several options available in the market that offer loans for only 10 to 5 percent down, especially for first-time home buyers. Lenders, however, will require you to get a private mortgage insurance (PMI), paid monthly on top of your mortgage.
The size of the down payment that you need to pay for a house also depends upon multiple variables. First-time home buyers, if they qualify, can head to the U.S. Federal Housing Administration (FHA) for a loan that only needs a down of 3.5 percent. Meanwhile, VA loans only ask for minimal down payment to veterans, active military men and women, and surviving spouses, provided they also meet the requirements.
There are upsides in paying a 20 percent down payment on a house, but don’t push it if you don’t have the time or the resources. Explore your loan options.
- You need to have an excellent credit score
While a healthy credit report equates to a less stressful mortgage process, your credit rating need not be more than 700 to get a mortgage loan approved.
Most mortgages require a score of at least 620, while the FHA only requires a minimum of 580. If in case you have a lower score than these, there are other available sources that lenders may consider reviewing, such as your rent records.
To summarize, you don’t need an exceptional credit score to get approved for a house loan—lenders just need proof that you are trustworthy and able to pay your dues responsibly.
- Opting for a fixer-upper will save you money
At a glance, you probably think that a fixer-upper would be a bargain, needing just a little renovation here and there to turn it from drab to fab. Unfortunately, such a property is not for everyone, and tends to benefit the hands-on hobbyists, the creatives, and enthusiasts.
If you’re not going to work on the house yourself and will only hire contractors to do most, if not all, of the job, it may be best to focus your resources on a move-in ready home. Ditto if your fixer-upper is simply going to be a one-off project. More often than not, buyers underestimate the costs that come with repairing and renovating a property. Next thing you know, you’re flushing your savings and potential earnings down the drain.
- You don’t need a real estate agent
Thanks to the internet, all the information you need to buy on your own is at your fingertips. Browsing online resources, you probably think that you no longer need the assistance of a real estate agent, and you may be right. Unfortunately, reality is rarely that simple.
Most buyers think that they are saving money by not hiring a real estate professional to get the deal done. But the expertise of a real estate agent is indispensable, especially when it comes to legalities and negotiations, upholding your personal interests, and maximizing the profit you get out of a home-buying transaction.
- You can skip home inspections
Sometimes, buyers rush or skip the home inspection altogether. First, it’s a huge expense, and second, it can prolong the process, which may be deemed needless by someone who has fallen head over heels over the property.
When performing an ocular on a property, you might argue that a professional inspection is unnecessary because there aren’t any visible problems that need immediate attention. You should be careful because sellers may capitalize on you skipping this important step.
If you waive the home inspection and purchase the property, you will get it as is—including all the problems that comes with it. So, get your money’s worth and save yourself from future headaches and stress by conducting a thorough home inspection.
Need more tips for buying a house?
Browse Ian McVeigh’s blog for more useful tips, whether you are to buy a house in Washington, DC or Alexandria, VA. If you are ready to dive deeper into the home buying process, get in touch with The Select Team today at 703.965.2304 or Ian(at)IansSelectTeam(dotted)com.