As a first-time home buyer, your lack of experience can certainly cloud your judgment as you prepare to buy a home. Getting ahead of the buying process means getting the facts straight.
Almost anyone who owns a home will claim to know something about real estate. However, it takes a true expert to determine exactly what is and what isn’t true about the process of buying a home. As the rules change, it is up to you to hire a competent agent that can help you to sort through the maze of opportunities.
When you buy your first home, you will likely have to do a significant amount of research in order to get a clear idea of what is involved in the process. As the person that will be liable for the property once the closing has come and gone, it is essential that you only consider the opinions of the experts when looking for advice about buying real estate.
By seeking out the advice of a licensed real estate agent, you can ask the questions that you have about the process to get clear and accurate answers on your real estate questions. However, many people simply turn to their friends or family for help assuming that they understand the process just because they may have bought a home previously.
Unfortunately, every case is different and what may have worked for another homeowner may not work in your situation. Here are some myths about home buying that could mislead you as you search for the right home.
Buying a Home Is an Investment
Although this myth is unlikely to be believed by many homeowners following the collapse of the housing bubble, some homeowners still live by the myth that their homes are investments. The truth is that when you buy a home, you should not be doing so with the intention of making profits. If it is the home that you will live in for years to come and raise a family in, you should focus more on whether the home will meet your lifestyle needs rather than any return you might get if you sold the home.
You Should Always Buy Instead of Renting
If you are planning to only live in a home for a short period of time, most real estate agents suggest that you consider renting instead. The costs of buying in some markets can actually well exceed the costs of renting, making renting the better option.
Market conditions can be unpredictable and there is simply no way to predict the conditions of the housing market that will exist when you decide that you want to sell at a later date. You will also be more likely to want to stay in your home in the event that market in your area changes if there is more keeping you there than just the appraisal value.
No Such Thing As a National Home Market
Many home buyers have heard so much about the housing crisis in the United States that they might assume that all of the conditions that are being reported in the national media apply to every area of the country. Many of the statistics that are published are summaries of data compiled from major markets and may not reflect what conditions are like in your area. Real estate market conditions are typically most affected by local trends.
You Don’t Need 20 Percent
“One of the main reasons renters do not become owners is because of the assumed burden of saving for a large 20% down payment, a requirement that does not exist,” says Joel Gurman, vice president of mortgage lending at Quicken Loans. “Fannie Mae and Freddie Mac insured loans require a 5% down payment and FHA insured loans only require a 3.5% down payment. That means on a $200,000 home purchase, the buyer only needs to put $7,000 down, as opposed to $40,000 if putting 20% down.”
While making a larger down payment can help you to obtain better terms on a loan, the 20 percent rule is a myth that shouldn’t deter you from considering purchasing a home. The state of your finances will likely be a bigger reason as to why you might not want to buy now.
You Need a Perfect Credit Score
Buying a home is possible even if you don’t have a perfect credit score. In fact, some loan programs are specifically-designed for people that have less than perfect credit. Having a less than perfect credit score may make it harder to obtain financing. However, it is by no means impossible.
Working With a Realtor Is Optional
As a first-time homebuyer, you need the guidance that comes along with working with an expert. It is simply a myth that you can do it on your own successfully as a first-time buyer. The paperwork for a home sale can be quite complicated and is continuously changing as local, state, and federal regulations evolve.
You need a real estate agent that has ample experience in helping buyers to find homes in your specific desired location. An agent can successfully guide you to homes that not only meet your requirements in terms of amenities but that also fall within the budget that you are seeking. A Realtor can also guide you through the negotiations process in order to help you to get the best deal.