The Truth Behind the 5 Most Common Home Buying Myths

Are you in the market for a new home? There are several home buying myths that you should be aware of before starting your search. Explore some of the most common myths to help simplify your home buying process in 2021.

Myth: Your Down Payment Must Be 20%

This might have been the case years ago, but now your down payment depends on many factors. Today, your overall financial health — like your credit history, income and debt — plays a large role in determining your monthly payments and interest rates. You can also apply for down payment assistance or use mortgage insurance to increase your buying power. To help you determine exactly what you can afford, speak with a professional mortgage consultant.

Myth: Your Credit Score Must Be Perfect to Buy a Home

Although good credit may help lower your interest rate and down payment, it is still entirely possible to buy a home with an average credit score.

FHA loans will accept you with a credit score of 500 or higher and at least a 10 percent down payment, as long as you pay off any outstanding collections or judgements. If your credit score is between 580 and 619, the minimum down payment jumps to 3.5 percent. Once you hit 620, you likely will qualify for a conventional loan and will not need backup from government agencies.

The ideal credit score for receiving the lowest interest rates is above 700. If your credit isn’t where you want it to be, try your best to build it over time and save up before starting the home buying process. Experts suggest keeping your credit utilization ratio around 30 percent. Once you feel you are in a better place financially, speak with a trusted lender who will help you negotiate your best options.

Myth: You Must Pay off All Your Debt First

Although you would think millennials — aged 25 to 40 — would dominate the home buying market, only about 20 percent of them own a home. Not only has the housing market dramatically changed in recent decades, but this generation may also have more student loans compared to Gen X and Baby Boomers. In fact, 83 percent of millennials attribute loan debt as their main reason for not buying a home. However, it is not impossible if you take these measures:

• Improve your credit score as much as you can.
• Decrease your debt-to-income (DTI) ratio.
• Take advantage of down payment assistant programs.

Myth: You Do Not Need a Home Inspection

Home inspections are optional; however, you should always opt to get one. An evaluation is useful because it can help uncover any underlying problems that may be cause for concern in the future. Inspectors can even search for mold, carbon monoxide and other toxic substances you may not have found yourself. The average home inspection costs between $250-$400 and is well worth the expense as it can save you from costly repairs down the road. Additionally, you can also negotiate with the sellers to have repairs performed or reimbursed before you close on the house. This will not only save you time, but it will also save you money.

Myth: All Home Buying Experiences Are the Same

The builder you choose can make or break your home buying process. From customer service and quality to financing and personalization, you should trust the company you choose to make your transition seamless from start to finish.

Perry Homes will exceed your expectations with a complete customer experience. We are dedicated to serving you and executing your vision before, during and after your move. Not all builders are the same, and our goal is to make your home buying process a great one.

Buying a new home is exciting and uncovering the truth behind the most common home buying myths will help you become one step closer to finding your dream home. Ready to start your search? Explore Perry Homes’ available properties to find a beautiful new home that suits your lifestyle.