5 Common Home Buying Myths
Buying a home can seem like a very intimidating process. Your home is likely the biggest investment you’ll make in your life, which can also make it your biggest risk. While it may seem frightening, buying a home should be an exciting time — in a get-out-the-champagne kind of way, rather than a get-out-the-Prozac kind of way. For many people, owning a home makes more sense financially and from a lifestyle perspective than renting a home. However, there are some common myths that many homebuyers believe to be true. Let me debunk these five most common homebuying myths right here and now.
Myth #1 – As a home buyer, different realtors can show me different properties.
This is a common misconception as there are people that I come across all the time that think realtors can only show and sell properties that are listed by their own company. The truth is, all realtors have access to the same database of homes through the Multiple Listing Service (MLS). The MLS is where the listing agent or the “realtor representing a seller” enters the property information, photos, and asking price, giving other realtors (buyer's agents) access to the details on the property. Because all realtors have access to the same database of homes, any licensed agent can show you any available homes. Now, that certainly doesn’t mean that all realtors are the same. You will want to work with an agent that you can trust, that has a real strategy to help you with the home buying process, that is very connected with other realtors, and most importantly you want a realtor that loves to win!
Myth #2 - As a Home Buyer I can’t afford to hire a realtor to help me.
One thing that many people are unware of is that as a home buyer, your realtor works for you for FREE. This is because the “seller” typically pays the traditional real estate commission for the buyer’s agent and the seller’s agent. Most buyer's agents do not ask for upfront money, fees or a retainer. So, if you’re considering a home purchase...why not have an expert in your corner? Utilize the services of a realtor that is hungry for your business.
Myth #3 - I can save money if I purchase a home that is “For Sale by Owner” (FSBO)
The truth is that homes being sold "by owner" or without representation from a realtor are often overpriced. The listing price is often selected by using inaccurate data. Remember, the main reason someone is selling their home without an agent is to save money. So, they’re probably going to have their home listed at a higher price to save or net more money, especially if they’re looking to move into a more expensive home. Many people price their home at what they want or “need” to get out of it, not what it’s realistically worth in the current market. The bottom line is a FSBO is the owner of the home they want to sell, and they are not a licensed real estate agent. They aren't bound by the Code of Ethics that realtors are, and may do and say whatever they want to get their home sold. In all reality, buying a FSBO can be like taking marriage advice from someone who has been divorced three times or taking nutrition advice from Krispy Kreme. However, if you are interested in a home that is FSBO, at the very least have an agent represent you and your best interests. Oftentimes, the only thing that’s able to salvage a FSBO deal is the help of an experienced agent.
Myth #4 is My credit is not good enough to buy a home
The truth is that most of the time, the home buyers I work with are pleasantly surprised to find their credit is better than they thought. Usually it is possible to buy a home and still get a good interest rate with less than perfect credit. With government backed loans like (VA, FHA or USDA), as long as your credit score is high enough to qualify (as low as 580) you still can get a reasonable interest rate. There are even ways to raise your credit score quickly in as little as a week or two. However, make sure that you are working with a lender who has a team of trusted advisors that can help you repair your credit so that you can accomplish your real estate goals.
Myth #5 - I need a large down payment to purchase a home
The mortgage lenders that I work with hear this all of the time. Especially from first time home buyers. Most home buyers believe that they have to have a minimum of a 20% down payment. However, the truth is there are actually several ways to not have to pay a down payment or have a low down payment such as;
VA Loan (Veterans Administation Loan) – 100% financing loan for military veterans and active duty personnel – 0% down payment. USDA Loan (United State Department of Agriculture Loan) – 100% Loan - A USDA Home Loan is a mortgage loan offered to rural property home buyers. This is also a 0% down payment.
FHA Loan (Federal Housing Administration Loan) – Usually only 3.5% down payment but there down payment assistance programs that can help pay your down payment and closing costs.
Conventional Loans that only require only 3-5% down payment?
Now, the key here is having a strategy and once we assess a potential homebuyer’s situation and needs we can literally have you preapproved within minutes and potentially out looking at homes right away. It doesn’t have to take weeks, months or longer! Many home buyers are often afraid to begin the home buying process, because of myths they’ve heard from others. Proper education will eliminate those myths! Buying a home is an important step to building a secure financial future. But because of some common misconceptions, many people believe homeownership is out of their reach. Don’t let these negative myths keep you from the personal and financial rewards of homeownership.
Written by Robert Lewis