Purchasing a new home is a thrilling experience. But, especially if you're doing it for the first time, it can be a little stressful. You'll undoubtedly come across plenty of well-intentioned but inaccurate advice along the way, including some common first-time homebuyer myths that have persisted despite a mountain of evidence to the contrary !
It's critical to spot and debunk these myths, both for your sanity and your overall experience during the home-buying process. To aid you in this endeavour, we've compiled a list of eight of the most common home-buying myths to be aware of, including a few that may astound you. Don't let any of these common home-buying myths hold you back from finding your dream home !
Avoid Real Estate Agents To Save Money
The facts: Purchasing a home without the assistance of a real estate agent appears to be a relatively straightforward process. After all, anyone with access to the internet can now search for available homes for sale and schedule a showing. However, if you don't work with a professional real estate agent, you'll almost certainly end up spending more than you would otherwise, even after commission fees are deducted !
Consider this: real estate agents are experts at analyzing comparable sales and negotiating prices, and it is their job to ensure that you get the best possible deal on your home. Purchasing a home without the assistance of an agent may make sellers less willing to negotiate with you and less likely to consider your offer in the first place. You'll also need to account for the cost of a real estate attorney !
Never Purchase in a Seller's Market
The facts: There are buyer's markets and seller's markets in real estate, and while one may be slightly more advantageous for you, a seller's market is certainly not a reason to avoid the season. When there are more buyers than homes for sale, a seller's market develops, increasing demand for available properties and potentially leading to bidding wars and offers that are higher than the asking price. Of course, neither of these things are ideal, but they're neither a given nor the only factor to consider when determining whether or not now is a good time to buy. Always keep the market in perspective. That means evaluating all of your potential benefits, not just who has the competitive advantage. It makes no sense to let a seller's market hold you back when mortgage rates are low and high-quality inventory is available !
Need To Pay 20 Percent Down Payment
Here are the facts: This is unquestionably one of the most common home-buying myths. While it's always a good idea to not spend more money on a home than you can afford, that doesn't mean you have to have 20% of the purchase price in the bank to make a good decision. Unlike some of the other myths on this list, this one is based on fact, as you used to need a 20% down payment to get a mortgage !
Today, you have many more choices, including first-time homebuyers and FHA loans that require as little as a 1% down payment. Aim to put down as much as you can, especially since a lower down payment will almost certainly result in higher interest rates and PMI (private mortgage insurance), but don't go overboard trying to reach that elusive 20% !
Need Excellent Credit Score For Home Loan
Here are the facts: Lenders consider more than just your credit score when determining if you're eligible for a loan and how much you can borrow. This includes your earnings, employment history, and debt-to-asset ratio. So, if you have a steady and reliable income but bad credit history, you'll most likely be able to get a loan from various lenders.
As a general rule, try to raise your credit score to 580 or higher before purchasing a home, as a low score will affect your loan amount and interest rates. However, don't let a lack of credit prevent you from pursuing your home-buying goals !
The Amount You Should Spend is Determined by the Total Loan Amount of House
Here are the facts: Many first-time homebuyers fall for this myth and end up paying more for a home than they should. It's critical to remember that you—not the bank—determine your budget. While a mortgage lender may approve you for a certain amount, the amount you can spend in the end is defined by your income, debt, and preferred monthly expenses, not by the cap !
When making a budget, keep your DTI, or debt-to-income ratio, in mind. According to this rule, you shouldn't owe more than 36 per cent to 41 per cent of your monthly income to debt, which includes your mortgage payment and your car payment, student loans, and other loan payments. Regardless of how much the bank approves you for, if you make $5,500 per month ($65,000 per year), you should set aside $1,980 to $2,255 for debt payments !
Get a Loan with Lowest Interest Rate
The facts: While interest rates are essential when choosing a loan, they aren't the only ones. A low rate may, in some cases, end up costing you more in the long run. Consider adjustable-rate mortgages, which begin with low-interest rates but gradually increase over time, frequently to higher rates. If you don't plan to stay in your home for a long time, an adjustable-rate mortgage may be appropriate; however, the longer you wait, the more likely your interest rate will rise. On the other hand, fixed-rate mortgages typically have higher interest rates up front, but there's no need to be concerned about them increasing over time. If it's within your budget, work with a mortgage broker to break down all the details of a loan, including but not limited to the interest rate, so you can be sure you're getting the best loan for your needs and long-term goals !
## The Price Listed is the Price You'll Pay
Here are the facts: Oh, how I wish this were true. The listing price of a home sets the tone for how much you'll pay for your new home in the end, but it's not everything. You'll also need to factor in various other costs, which can quickly add up. Additional costs include home appraisal and inspection fees, mortgage broker fees, attorney fees, and closing costs. Before you can move in, you may need to make some repairs or upgrades to the property, and you'll almost certainly have to pay for moving expenses. Do you require new furniture, paint or appliances ? All of these expenses must be added to the total cost of your home purchase and accounted for in your budget !
Whether you're a first-time homebuyer or a seasoned homeowner, you should be aware of the first-time home buyers myths. Furthermore, there is no reason to go through the home-buying process without the help of a professional. We're here to answer your questions and take care of the heavy lifting so you can focus on planning your new home. Call today to schedule a no-cost, no-obligation consultation with Guglu Homes !
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