Uncovering the Truth Behind Major Home Buying Myths

Uncovering the Truth Behind These Major Home Buying Myths

Purchasing a new home is an exciting time. However, there are several home buying myths and misconceptions that may complicate a search or hold potential homeowners back from buying a property they love. Take a look at some of the most common myths you should be aware of before starting the home buying process.

Myth: You do not need a home inspection

Home inspections are optional; however, you should always get one—even for new-construction houses. An evaluation is beneficial because it can help uncover any issues that may be cause for concern in the future. The average home inspection costs between $200-$400 and is well worth the expense as it can save you from costly repairs and services down the road. Additionally, you can negotiate with the sellers to have repairs performed or reimbursed before you close on the home, saving you time and money.

Myth: Your down payment must be 20%

While a 20% down payment is considered standard, it is not the only option. Low- and no-down-payment loans do exist—veterans and military service members are often able to secure mortgages with minimal or no down payment. Homebuyers with good credit may be able to pay as little as 3.5% down with federally insured loans. It is important to note, though, that this insurance can add hundreds of dollars to your mortgage payments each month. 

Myth: The only up-front cost is a down payment

There are several initial costs homebuyers should be aware of when planning for their purchase. First, the seller may require you to cover closing costs—this can be anywhere from 3%-6% of the purchase price depending on the state you live in. There are also several fees, taxes and additional charges for inspections, credit reports and insurance that may add to your up-front payment on a home purchase.

Myth: The asking price is set in stone

Much like purchasing a car, the offer you make on a home does not necessarily need to be the asking price. If you have substantial credit, a pre-approved loan and enough money for a down payment, sellers may be more willing to negotiate the price tag on a home. You can even include any issues uncovered during the home inspection in your negotiations to help validate your offer.

Myth: You don’t need an agent

It can be tempting for many buyers to try finding a home on their own in order to save money. However, real estate agents play an important role in the home buying process. They can help you stay within your budget, find homes that fit your needs, assist you in the closing process and much more.

Myth: Your credit must be perfect to buy a home

Your credit score is an important aspect of the mortgage process that will show lenders you are a reliable borrower. However, lenders do not require your score to be more than 700. Most mortgage lenders require a median FICO Score of at least 620, while Federal Housing Administration (FHA) loans require roughly 580.

Similarly, student loans have an impact on your mortgage approval process. However, you do not need to have paid them off entirely but showing that you are making payments timely will help.

Myth: Buying a home that needs a lot of renovations will be cheaper

Purchasing a fixer-upper may make financial sense if you plan to complete the work yourself—more often than not, though, the cost of upgrades will outweigh the savings. Repairs take a great deal of time to transform a property into one that meets your unique lifestyle. If you need to tear down walls to make it livable, then it may be best to move on and find a more turnkey option.

Myth: You should spend as much money as you qualify to borrow

A bank may let you borrow $500,000, but that does not mean you should. Calculate the full cost of buying and be reasonable about your monthly budget, keeping your other financial commitments in mind. If you borrow less and put down a higher down payment, you may be able to lower your interest rate and monthly payments. 

The home buying process can be a daunting task. Uncovering the truth behind most common home buying myths will help you get one step closer to homeownership. Are you ready to find your dream home? Explore Perry Homes’ move-in ready properties to start your home search!