Six Homebuying Myths to Watch Out For
- Author: Mary Singleton
- Posted: 2024-04-08
1. You Have to Make a 20 Percent Down Payment
Although it’s normally standard to need at least 20 percent of the cost of your home as down payment, it can take years to amount to that kind of money. In fact, in the past few years, there have been more low down payment programs than ever before. Nearly 60 percent of first-time home buyers spend six percent or less on their down payment, according to the National Association of Realtors. However, just because you can put down less, doesn’t mean you always should. Putting down a lower down payment can increase your monthly payments and your interest rate, making it harder to pay off your mortgage.
2. Your Credit Score is Already Good Enough to Purchase a Home
It’s a complete myth to believe that your score is “good enough.” The higher you get your credit score, the more money you’ll end up spending. Since the lender determines your interest rate and home loan from your credit score, the better it is, the more affordable your mortgage will be. However, if you have bad credit, don’t think this ruins your chances to buy property. Instead, work on increasing your score over time, by the time you want to take out a mortgage, you’ll end up saving loads more than what your credit score was at before.
3. Pre-Approval Decides Your Price Range
Mortgage pre-approval simply means your lender/bank has reviewed your credit history and has decided what size home loan is easiest for you to pay off and what is the lowest risk to them. This doesn’t mean you can’t afford more; it's more of an estimation. Although you should give yourself a cushion of money to stay financially safe, you can spend less or more than what your pre-approval is set at.
4. Your Work is Done as Soon as You Make the Offer
Although most people believe that as soon as they make the offer the hard work is over, that was the easy part. In fact, you need to get the new home inspected, pay fees for your realtor, the move into your new home, etc. The truth is that once you send in your offer, the hard work has just begun.
5. You Can’t Negotiate the Property Price
In truth, almost everything is negotiable when you’re dealing with home buying. For example, if there are repairs to be done, you could ask them to be taken out of the closing cost. Plus, there are also other costs to consider negotiating, such as lawyer fees, broker fees, appraisal fees, etc. By negotiating the terms of your closing costs, among other things, you could end up saving a lot of money.
6. You Purchased Your Dream Home
Nearly 49 percent of homebuyers regret their purchase, according to a study done by Nerdwallet. Although there are two types of regrets, ones that you can live with and ones you cannot, there’s an unlikely chance that you will end up buying your dream home. However, it’s perfectly normal to regret your purchase, over time you’ll grow to appreciate your home and realize it’s what you needed the whole time. You just need to overgrow the feeling that your dream home is waiting for you because it’s really not.
Buying a home is never an easy process, but it could be with a few fewer myths to believe in. When researching tips about the homebuying process, it's important that you read into trusted sources to avoid getting truths mixed up. Hopefully, we could clear the air on a few simple misconceptions about buying a home, we wish you the best of luck with your home buying experience.