Purchasing a home is exciting, frustration, energizing, anxiety-provoking and fascinating. Since a home purchase is such a contrast of strong emotions, the last thing you need is to use a series of myths as you search. Some of these myths have a basis in fact, some are obsolete, and others are just wrong. The important thing is to educate yourself on these common myths so you can recognize them and combat them if you need to.
1. A House Must Meet All the Items on your Dream House List
Home selection is an emotional process. We invest many memories and emotions in our homes. However, it is important to remember that the building is not the primary emotional claim; rather, the family who inhabit the home and create their unique lives there is the emotional foundation of home-related sentiment.
Few of us move into a house entirely content with every detail of the existing building. We may need to add storage, remove wallpaper, redesign a bathroom or convert a garage into a recreational space. Look for a house within your budget that meets the big items on your list and you can take your time making changes as you live there.
2. If you Don’t have 20% to Put Down, You Can’t Buy a House
This was a traditional understanding for a long time so it’s no wonder that it’s taking a while to correct it. Many of us learn much of what we “know” about a home purchase from family members and friends who may have purchased in different places, under different circumstances, with different goals. It’s important to bust out of the myths or conventions surrounding house purchase and learn the facts.
There are home loans with down payments as low as 3.5% that can help you get into a home of your own. Such loans are available to people with steady income, good credit and a strong financial history, so you may well qualify for this assistance. Do the research to understand.
3. You Don’t need an Agent to Purchase a House
This is literally true: in fact, you don’t need an agent to either purchase or sell a house; there is no law requiring you to use real estate agents. However, since the seller usually pays the closing costs which includes the commission to the agent, there are many reasons to use an agent and few to avoid using one.
A real estate agent is familiar with the area and can show you houses that fit the description you supplied without taking you through dozens that disappoint. Your agent has a finger on the pulse of the market and can show you new listings as soon as they come on the market so you don’t miss anything. Most importantly, your agent manages all the sticky, complex details of closing on a house, which is worth a great deal.
4. The Down Payment is your only Significant House-Buying Expense
The history of this old wives tale is pretty murky. However, with housing prices so high, it’s easy to think that putting down many thousands of dollars must be your only real expense in home purchase, but it is far from true. Associated with the house purchase is usually a bank mortgage and there are many fees associated with that. You need to hire a home inspector, which is a small amount in comparison with the down payment, however is still real money. Many communities also have associations with dues every month and finally, don’t forget about repair or upgrades that may need to be done immediately upon moving into the home.
Certainly, the down payment is usually the largest single cost of home purchase, but there are many other expenses associated with the process beyond it for which to budget.
5. Poor Credit? No House for you!
Your chances of negotiating the best rates for your mortgage are highest if your credit rating is good to excellent. However, that does not close the house door on you. It may take a little longer and you may have to use less traditional means, but it’s still possible for you to purchase a house with less than excellent credit.
6. Expect the Seller to Renegotiate After the Inspection
Many purchasers think that the seller will offer price adjustments after the inspection is complete; some purchasers add what they expect to get back to their offer. It is unwise to think that, having agreed to a price, the seller will want to renegotiate to your advantage. Not so long ago, it was customary for people in some areas to place their houses on the market without making an effort to make repairs. That is less common now. The inspection may not turn up any difficulties on which to base a price change, the seller may be simply unwilling to change and you will be disappointed and possibly out of pocket unexpectedly.
7. Buying the Worst House on the Block is a Flawless Plan
If you purchase the least attractive or poorest condition house on the block, you will realize more significant increase when you resell. There are very few universals in real estate and this is not one of them.
Yes, in the right circumstances, you can do well financially from purchasing a house in less than ideal condition and fixing it up before reselling, but there are so many possible difficulties associated with this they are hard to count. For example, you may not have the money you need to make substantial changes, leaving the house little better than it was when you purchased. The neighborhood may change and no longer be as desirable as it was when you purchased which would naturally decrease house prices. Or, and this is a significant issue, you may not be able to sell when your house is most valuable, so acting on this myth can really cost you.
8. A House is an Air-Tight Investment
“Safe and houses” is an old expression, but we don’t know if it referred to the price of the house as an investment or the safety associated with having a home. In investment terms, it is unreliable. If you purchase wisely in an active market, your house should increase in value. However, many factors beyond your purchase price can limit your selling profit. The national economy may be less robust when you sell, your area may experience an unpredicted reversal as a result of a natural disaster or a local change such as the removal of a large employer may impact the price. While historically most homes have been great investments, many homeowners have lost money on their homes in the past due to the economic downturn between 2007-2010.
9. Renting is Cheaper than Owning
There is no living situation that is perfect for every person, however, many renters spend as much or even more on rent each month as a reasonable mortgage would cost. They may be ultimately better off building equity and a good credit history by purchasing. Rather than act on this assumption, talk to knowledgeable people to see if home ownership is possible for you.
10. Spring and Fall are House Buying Seasons
Before the Internet created a world-wide marketplace, we did see the highest number of houses on the market in spring and fall. However, with online listings available everywhere and people with and without school age children relocating all year around, you can miss some excellent opportunities by restricting your purchasing or selling opportunities to these two seasons.
House shopping is such a large effort and has so much emotion invested in it that we need to be guided by facts rather than myths. Consult the experts before making a decision to be sure you know all you need to know about purchasing or selling a home.