Buying a home is easily one of the most exciting and daunting purchases of a lifetime. If a journey of a thousand miles begins with a single step, we want to make sure that your first step in the homebuying process doesn’t deter you. Unfortunately, well-meaning advice from family and friends might start you out on the wrong foot. True Homes is here to help in your overall homebuyer education, starting out with busting up common homebuyer myths.
The very first step is searching for a house.
Actually, the best thing to do before you start looking at homes is to understand your financial situation and get pre-approved for a loan. So before you accidentally get your heart set on a dream home that is out of your budget, you’ll learn what price range you should even be considering. Then you can get into the fun part of searching for a home without the major mental roadblocks and setbacks.
Your down payment has to be 20% of the cost.
This statement simplifies the variety of loan types and overestimates the initial cost of homebuying. First-time homebuyers are often told that twenty percent of the home’s purchase price has to be paid upfront to the mortgate lender. It’s true that traditional loans were 30-year fixed rate mortgages with 20% down payments, but now there are different types of loans and varied down payment rates. Nowadays loans can be paid off in 15-year or 30-year plans and have down payments as low as 10% or even 5% down. You can also look into the Federal Housing Administration to see if you qualify for a government loan with only 3.5% down.
All you need is your down payment and you’re good to go.
Many first-time homebuyers stop to celebrate after accounting for the down payment. It’s important to take some time to plan out and prepare for additional upfront costs such as closing costs, taxes, fees, insurance, inspection, and appraisal costs. Do your research so that you are fully prepared financially.
You must have a perfect credit score.
It’s true that your credit score is an important factor in the mortgage process. But your credit score doesn’t have to be above 700, and there are even options for you if it falls below that. A median FICO® Score of at least 620 is typically required, while FHA loans require roughly 580.
It’s a bad time to buy! Buy while the market’s hot!
Somehow it seems that it’s either an extremely bad time to buy or an especially good time. But no matter what the housing market looks like, you can’t win if you aren’t financially prepared. The right time to buy is when you are ready. Basing your decision on market trends can cause homebuyers to jump into something too soon, or to wait too long trying to predict the market.
Prepare for costly maintenance
Many first-time homebuyers are warned to expect high maintenance costs for a home, but they aren’t informed that they have supporting options. You aren’t helpless to the estimates of spending 1-4% of a home’s purchase price every year on maintenance. One of your options is a home warranty that could potentially save you thousands of dollars and make repairs manageable.
Take a step back and look at each step of the homebuying process with a wide lens. Be realistic about each step, whether you’re still saving up, or you’re just getting started and trying to figure out what to expect. True Homes is here to help you stay true to yourself, your needs, with further homebuying tips and information on our blog.