From searching for homes to picking up your new keys on closing day, buying a home is an exciting process. Many first-time homebuyers also have the benefit of receiving advice from family members or friends who’ve already gone through the process. While it is certainly good to hear a few different perspectives while you’re buying a home, buyers should also know to take any home-buying advice with a grain of salt.
First of all, every buyer’s experience is different. Secondly, there are a lot of myths that circulate about buying a home. Today, we’re debunking some of the most popular home-buying myths.
Here are five fallacies that first-time home-buyers can ignore:
1. You’ll save money if you don’t use a real estate agent.
Of course, this myth is one that we take personally. And why not? It is simply not true. Even if you think you’re prepared to search for a home, schedule all of your showings, complete the proper paperwork and take yourself through closing (all incredibly good reasons to have a real estate agent), why would you not get one – particularly if you know that sellers typically cover all agent fees? A real estate agent’s commission is built into the selling price of a home. That means it has already been determined by the time you might consider buying, or even touring through, a home.
2. You must put 20% down on a home to get a conventional home loan.
This myth may have been true many years ago, but it is completely outdated. In the past, some lenders would only approve a mortgage if a buyer could pay 20% of a home’s price up front. However, times have changed. Today, buyers can get a conventional home loan by putting down as little as 3% to 5% of a home’s price. Instead of covering that cost up front, they often pay private mortgage insurance, or PMI, until they reach the balance of the 20%.
3. You can skip the home inspection – especially on a new home.
This myth is simply poor advice no matter where it comes from. Home inspections are imperative to the buying process. Bringing in an impartial home inspector to make sure a home is structurally sound is, without a doubt, a great idea. Often, your home-buying contract may contain a clause that allows you to walk away from a potential home if an inspector finds a major issue. Even new homes may contain mistakes that are not visible to the everyday eye. Let an inspector help you make sure your home is move-in ready before you close on a home that has more issues than you’ve bargained for.
4. If the house is great the neighborhood doesn't really matter.
It's the perfect house at the perfect price, but the neighborhood is not quite what you imagined. Should you purchase it? Maybe not! Once you move in, you'll notice the neighborhood plays a bigger role than you ever imagined. So, before you buy, consider your commute, nearby amenities, accessibility, and other factors that will affect your daily life.
5. The amount you are pre-approved for is the amount you should spend.
This myth is a recipe for financial disaster. Just because a lender approves you for a certain amount does not mean that you should buy a home that will extend your budget to those lengths. What many first-time buyers may fail to realize is that there are many other costs that come along with home ownership. Just some of these responsibilities can include closing costs, monthly utilities, homeowner association fees, renovations, and regular home maintenance—to name a few! Buying a home that takes you to the full extent of your budget may only cause financial problems when any other issues arise in your home or personal life.
If you’re a first-time home buyer ready to begin exploring potential homes, get excited about the process. Take the advice that family members or friends want to give, but recognize that some of their advice may be mere opinions.