Home Buying Myths
The National Association of Realtors® recently examined consumer perceptions of home ownership. This study examined both homeowners and non-homeowners and their opinions on the market, why they do not own a home and what would prompt them to purchase a home in the future. Of the U.S. Consumer households surveyed, 64% were homeowners, 26% were renters and 11% lived with someone else*.
Some of the most interesting aspects of the survey for me, were that an average of 80% felt it was a good time to purchase a home, 87% desired to own a home but felt they could not afford it*. One of the reasons I think so many felt they could not afford it is a real estate myth regarding down payment. Over 39% of non-homeowners and 30% of homeowners felt they needed more than a 20% down payment to purchase a home*.
Now a 20% down payment is ideal if you want to avoid PMI (Private Mortgage Insurance), but many lenders do offer home loans with as little as 10% or even 5% down. Another option is to skip a conventional loan and opt for a Federal Housing Administration (FHA) backed loan with only 3.5% down, if you qualify.
This brings me to another home buying myth. Most people feel they need to find the home they want first and then worry about the finance part. While browsing online for a home is fun, you need an accurate picture of your budget. The best way to determine that is to speak with a mortgage lender. This can be a scary proposition for some, especially if they are worried about their credit score.
Credit Score is yet another myth. While a good credit score can potentially make it easier to get a loan with a lower interest rate, other factors are considered too. Lenders look at things including your credit history and your amount of debt and savings. Also, some loans such as FHA allow for lower credit scores.
Finally, the last myth I need to mention is the myth that you do not need a real estate agent. While websites and apps offer the ability to locate property, don't discount the value of a trusted and experienced real estate agent. As real estate professionals, we know the ins and outs of buying a home, including the best locations, and pricing information. We also can provide the inside scoop on neighborhoods and where to find the newest listings before they even hit the market—which can save you significant time and money in the long run. By the way, as a buyer, it will not cost you anything. Typically, our commission comes out of the sale proceeds.
So are you in the market for a home? Contact me today! I would love to help you.
*Source National Association of Realtors® Research Division - 2017 NAR Aspiring Home Buyers Profile