6 Home Buying Myths

Most home buyers get a lot of advice from friends and family – some good, some bad. A lot of myths can pop up and negatively guide your home purchasing experience. Make sure you don’t fall for one of these common buying falsehoods.

1. The only upfront cost is the down payment.You need to be prepared for several expenses – everything from fees, taxes, costs for inspections, credit reports, insurance, and others. Closing costs can be anywhere from 3 percent to 6 percent of the purchase price. Those costs can fluctuate greatly depending on the state you live in too.

2. Just looking for a house casually is not a big deal.
If you think you want to start looking at homes to get a feel for the area, before you even sit down with a REALTOR®, you may be setting yourself up for a major heartbreak of falling for a home you can't afford. Home shoppers – even at the earliest stages – should get pre-approved for a mortgage so you know your budget from the get-go and don’t waste time looking at homes that are out of their price range.

3. You must have a 20% down payment.
Yes, a 20% down payment will help a buyer avoid paying private mortgage insurance. But 20% down isn’t required. Many lenders will still qualify a buyer for home loans with 10% or 5%. Some buyers can even qualify for only 3.5%. There are many options for down payment assistance that lenders can explore with a buyer who has a limited amount to put down.

4. Schools shouldn’t matter if you don’t have kids.
The neighborhood you choose matters – even if you don't have school-age children. When you want to sell later on, that could be a big factor to your buyer and the timing to sell your home. Good schools are a sign of a good neighborhood. You should explore all the neighborhood factors that could influence your home's appreciation and desirability.

5. You don’t need a home inspection.When the housing market is extremely competitive, some home shoppers may be willing to waive the home inspection in order to get the home they want. But as the saying goes, buyer beware. 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 with a simple walk-through of the home. Hire an expert. It will pay off in the long run. 

6: 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 a 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.

Source: Realtor.org

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