First-Time Home Buyer Myths
Top Myths of First-Time Home Buyers
If you’re thinking about buying a home, it can be difficult to distinguish fact from fiction. Buying a home doesn’t have to be a scary decision. Armed with knowledge and support from professionals, you can easily become equipped to make the right choices for your first home.
Myth #1. You need a big down payment.
Many believe that first time home buyers are required to provide a 20% down payment. While this was true in the past, today the average down payment for first time buyers is only 7%. With a Federal Housing Administration (FHA) loan, the minimum down payment is only 3.5%. Some first-time buyer programs even offer no money down. In addition to the down payment, you will also be required to pay closing costs when you finalize your mortgage. Closing costs are typically anywhere from 2-4% of the total purchase price. This amount includes the cost for items like homeowner’s insurance, title fees, home inspection, appraisal and more.
Myth #2. You need a high credit score to buy a house.
You don’t need perfect credit to buy the perfect home. There are loans out there for buyers with lower credit scores. These are good options for buyers who have had credit issues in the past. Some of these loans do come with additional fees. Your realtor can help connect you with a few local lenders or mortgage brokers who specialize in first-time home buyer loans.
Myth #3. It is less expensive to rent.
In fact, there is a good chance that your monthly payments will be lower than your rent. Unlike rental costs, your monthly principal and interest payments will stay the same for the life of a fixed-rate mortgage. Additionally, as a homeowner, you will be building equity in your home.
Myth #4. You must pay off student loans before qualifying for a mortgage.
A mortgage lender looks at debt-to-income ratio (DTI) to qualify a buyer for a loan. DTI = (mortgage payment + monthly debt payments) / gross monthly income. This assures the lender that the buyer will be able to afford the monthly mortgage payments along with other existing payments. If the DTI is low enough, a student loan will most likely not be an issue.
Myth #5. Location is the most important thing.
Location is important to consider when it comes to school districts and commute times, but you also need to think about how the home will function for you and/or your family. For a large family, the number of bedrooms is equally as important as location. You still want to choose an area with great resale potential, and this is something that your agent can speak to you about.
Myth #6. You do not need the help of a real estate agent.
A real estate agent can be extremely advantageous for you. An agent can not only assist in finding potential properties within your budget but can also be instrumental in helping negotiate a purchase price, finding a mortgage broker and supporting you through the closing process. Usually your agent’s fees are paid for by the seller.
The earlier you enlist, the better an agent can help you with the purchasing process. An agent will create an ongoing search for you in the Multiple Listing Service (MLS). You will then get notifications for homes that meet your criteria as soon as it hits the market. The information on the MLS is typically more current than home search sites. Establishing the search a few months before you are ready to buy can help you be more informed when you are ready to start visiting available properties.
If you would like to learn more:
If you are a first-time buyer, there is no reason to fear and no reason to go through the home buying process alone. You can schedule a FREE personalized no-obligation zoom presentation to learn more.
Just click SCHEDULE and pick a time that works for you.
This content last updated on Sunday, April 18, 2021 10:30 PM from BRIGHT.
This content last updated on Sunday, April 18, 2021 10:30 PM from CCAR.
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