Buying a home, whether it is your first home or your fifth, is an exciting time. You might be turning to friends and family for advice and guidance during this process. While friends and family can speak to their own experience and may have some excellent advice, it is important to keep an open mind and not believe everything that you hear. Unfortunately, there are many misconceptions out there and misleading information abounds. The following are common misconceptions about home buying that buyers need to be aware of so that they do not make a misinformed decision.
The process starts with searching for and finding a home.
Obviously, finding a home that is the best fit for your and your family is important and you might think that it is the first step in buying a home. However, this is untrue. It is not smart to start shopping for a home without first talking to a lender or bank to determine how much you can afford. A lender will be able to tell you what you are qualified for so that you do not fall in love with a home that is out of your price range. It can be difficult to find a house in your price range if you have already fallen in love with a home you can not afford. Do not start off your house hunting process with heartbreak.
Bad credit means that you can not buy a home.
Sometime people get in over their heads with credit cards or loans and their credit score is affected. Fortunately, bad credit does not mean that an individual can not buy a home. While good credit is certainly a benefit when purchasing a house, bad credit does not necessarily preclude a person from doing so. There are many factors that go into determining a person’s qualifications for a mortgage. A bad credit score will likely mean a higher interest rate, however. So, while it is not completely necessary to have an excellent credit score and there may be a lender out there for you, working on raising your credit score can help you save money on interestin the long run.
A real estate agent is unnecessary.
With the vast amount of information available on the internet, some people may think that they can handle the home search on their own. A majority of the time, the cost for a real estate agent is paid for by the seller. As a buyer, it can be helpful to utilize the free service of a real estate agent. The agent will likely have access to more homes for sale and homes ready to be toured than is publicly available on the internet. A real estate agent can help save you time, as well, by eliminating outdated listings, listings that are actually scams, and generally having the experience to effectively find potential homes you might like. While you may have none or limited experience buying a home, a real estate agent will have a vast amount of experience in negotiating contracts, getting the best deals, and making sure the buyer is protected.
The only upfront cost is the down payment.
Depending on the type of loan, the amount that is required as a down payment varies. Some individuals think that the required down payment is 20% across the board. This is not true. A Federal Housing Administration (FHA) loan only requires that there be a 3.5% down payment. This percentage is for buyers with a credit score greater that 580. Additionally, there may be some loans that do not even require a down payment. However, it is smart to make a substantial down payment to save money over the length of the loan. The down payment, however, is not the only upfront cost. An appraisal and closing cost are just a couple of the additional costs at the outset of buying a home. In some instances, closing costs and other costs can be negotiated to be included in the offer price to the seller, but this is not always the case. It is important to discuss this with your agent or attorney to determine if rolling the costs together is in your best interest.
The real estate attorneys at Massey, Stotser & Nichols, PC are here to help you with your home buying needs. We know that as exciting as this time this might be, it can be daunting and full of misinformation. Contact us today to get your questions answered and allay your fears of buying a new home.