Most Common Myths About The Homebuying Process

Most Common Myths About The Homebuying Process

You’ll Need A 20% Deposit

Even though most conventional loans require a 20% down payment, there are a few loans available that meet a variety of financial situations. It’s not unusual to be tight on funds when it comes to thousands of dollars.

You may often be eligible for an FHA or VA loan, as well as a down payment assistance program, with as little as 3.5 or 0% down. Keep in mind that if you don’t put down 20%, you’ll have to pay private mortgage insurance (PMI).

You Must Have Exceptional Credit

To receive the best mortgage rates, you normally need to have a good credit score. The lower your credit score, the worse the interest rates you’ll be charged—and if it’s low enough, you could not even be issued a loan at all.

There are, however, alternatives if you wish to become a homeowner before working on your credit. The credit requirements for an FHA loan are far less stringent than those for most conventional loans. To qualify, your credit score might be as low as 580 (with only a 3.5 percent down payment necessary).

The Amount Of Money You Can Borrow Is Determined By Your Salary

While your debts are taken into account when establishing the loan amount, your monthly or yearly income isn’t usually a deciding factor.

For example, if you earn $60,000 per year and have big credit card debt, it may be more difficult for you to obtain a significant loan than if you earn $45,000 and have no debt.

Prequalification And Preapproval Are The Same Thing

Contrary to popular belief, these two words do not have the same meaning. To become pre-qualified, you provide your lender with basic information about yourself (assets, income, debts, and so on) so that they can evaluate what type of loan you qualify for and estimate how much you’d be able to borrow.

However, you are not preapproved until the lender is ready to provide you a loan after validating the information you submitted. After your lender reviews your financial history and credit rating, you’ll be required to submit a mortgage application.

The Closing Fees Are Covered By The Seller

Many people have most likely heard from relatives or friends that the seller of the house they purchased paid their closing fees. While this is true in several instances, it is typical for the seller to refuse to pay for them at all.

It’s important to take into account how much money you’ll need to put down upfront for things like a credit report, a survey charge, title services, an attorney fee, and property insurance. Closing fees are typically 2 to 5% of the home’s buying price.

The Seller Will Make Repairs Based On The Inspection Report

When it comes to negotiating repairs following a house inspection, your realtor will help you as much as they can, but you won’t always be that lucky. If they won’t hire someone to complete the repairs before you close, and they won’t provide you cash-back credits to pay your own professional to come in, you’re probably on your own.

During the homebuying process, this is the “take it or leave it” attitude, and they either aren’t in a hurry to move and can wait for additional offers, or they already have other offers on the table (one of which may not have asked for repairs assistance).

The Asking Price Is The Selling Price

You can look at a house that captures your attention but decide not to pursue it if it is out of your price range. However, there are other factors to consider when determining what you can put in for an offer and what you may be able to walk away with.

If the house has been on the market for a long period, it may be an indicator that it is overvalued. Many sellers will be eager to reduce the price considerably. If an examination reveals that the house requires certain renovations, the seller may drop the asking price.

The Only Upfront Expense Is The Down Payment

While this may appear to be the case at first, closing fees will become apparent as the homebuying process progresses. As previously stated, while the seller will often cover part or all of the closing fees, they may not cover anything at all in other situations.

After you move in, you’re bound to find some items that need to be repaired or upgraded, and you’ll almost certainly spend some money outfitting your new home. Don’t forget about the emergency fund—you’ll need it when you move in to meet expenditures like your mortgage payment if you run into financial issues (i.e. losing your job).

Renting Is Less Expensive Than Buying

This is one of the most contentious aspects of the home-buying process, and it truly is a personal choice. However, statistics suggest that rent costs are rising faster than property prices in today’s market—and if you had to decide between paying a landlord monthly and paying your own mortgage payment monthly, wouldn’t you rather want that money to go to YOU and your own assets in the end?

Now that you’ve debunked these home-buying myths, you’re off to a great start. Call us to take the next step in your home buying or selling process. We can take you through lending programs and assist you in obtaining mortgage pre-approval, which will provide you with an accurate estimate of how much mortgage you can afford. And most importantly, get you your dream home in no time.