Common Home Buying Myths – Busted!

So you’re ready to buy a home, upgrade or downsize from your current home, or are just looking for something new! In this exciting but admittedly scary time, you might be inclined to turn to friends and family for advice.

While anyone who watches HGTV thinks they are a professional, they might not be the experts they (or you) think they are. You could be receiving bad, though well-intended, advice without even knowing it.

We’re here to bust the most common misconceptions about home buying so you can do this thing the right way – because this is what we do.

Myth #1: Your down payment must be 20%.

Sure, a 20% down payment is ideal if you want to avoid that pesky private mortgage insurance (PMI), but many lenders will be glad to offer up home loans with 10% or 5% down—as long as you’re willing to foot the monthly bill for PMI. Or you can skip the conventional loan and head to the Federal Housing Administration for a government-backed loan with only 3.5% down, if you qualify.

In fact, there are thousands of options for down payment assistance. And while many programs are geared toward low-income homebuyers, you don’t have to be penniless. There are lots of different ways you can qualify for help on the local or federal level.

Myth #2: You can’t buy with bad credit.

If you’re looking to get a conventional loan, having bad credit might give you a full stop. However, FHA loans require only a 3.5% down payment and borrowers with low credit scores – even under 600 – can qualify. Keep in mind, though, that FHA loans may look great at first, but they definitely aren’t for everyone.

Myth #3: You don’t need a home inspection.

You might be tempted to believe this tall tale, especially if your housing market is hot and you’re worried your dream home could be sold in a split second to someone else who waives the home inspection.

But beware: Sellers are banking on your skipping this crucial step. It means you’ll get the home as is, including any and all problems that come with it. And sometimes those problems aren’t exactly visible.

Myth #4: The asking price is set in stone.

Much like buying a car, the offer you make on a house does not necessarily have to be the asking price. If you have stellar credit, pre-approval, and a down payment ready to go, sellers might be more willing to negotiate than to wait for another, possibly less awesome, buyer to come around.

Plus, if your home inspection (you know—the one we mentioned above that you got because you don’t believe myths) turns up issues, you can use those to your advantage in your negotiations.

Myth #5: A 30-year mortgage is the best option.

If you think that the longer you agree to invest in your home, the cheaper the mortgage payments will be, think again. Most people opt for 30-year fixed-rate mortgages and for valid reason: Monthly payments for a 30-year fixed-rate mortgage are lower than its 15-year counterpart.

But consider this: You could end up paying more during the life of the loan if you pick the 30-year option instead of the 15-year mortgage. That’s because essentially, with a 30-year loan, you’re borrowing the same amount of money for twice as long—at a higher interest rate.

Myth #6: You don’t need an agent.

You might think you can do this home-buying thing solo. After all, isn’t that what the Internet (and HGTV) is for? While everyone is different, we urge you to resist the urge to DIY your first home purchase and call a realtor instead. Realtors are pros who bring expertise to the table.

 

Don’t let what you think you know derail you from the home of dreams. Give us a call today so we can bust any other myths out there!

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Our agents write often to give you the latest insights on owning a home or property in the Chattanooga Metro Area area.

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