Look, I get it. Buying a home can be a super-scary, often overly complicated thing. It’s almost definitely going to be the most expensive thing you ever buy or own (unless you’re into buying multi-million dollar pieces of artwork or a secret island lair)! But I promise you that at least some of myths you’ve heard about the process are totally unwarranted. So, today, I’m here to debunk some of them to put your mind at ease.
“I have to use the lender my real estate agent suggests.”
False. I have a wonderful lender that I’d love for you to use. His name is Ismael and he’s not just good people, he’s a hard worker and super knowledgeable and will absolutely help you find the right loan for your needs. But you do not HAVE to use him for your home loan. There are tons of lenders, banks, and mortgage brokers out there to chose from. If you think you can find a loan you’d rather get with another lender, by all means shop around. You have to find the loan that’s best for you and your financial needs and capabilities. If you meet with my lender and feel like you could do better elsewhere, I invite you to do so and fully support you in your decision. Let’s do whatever we need to do to get you the home of your dreams!
“There’s a pretty firm barrier that keeps people from buying homes unless they’re independently wealthy.”
False. While it’s true that home prices are on the rise, as are mortgage interest rates, there are still plenty of programs to help. The government WANTS people buying homes - so there are numerous first-time homebuyer programs, closing cost assistance programs, down payment cost assistance programs, tax deductions and credits, and even “creative financing” options you can take advantage of.
“You gotta have 20% of the purchase price as a down payment!”
False. As I stated in the last paragraph, there are down payment assistance programs. You can often get conventional loans with 15% down, and sometimes even 10% (you’ll just have to pay more in Private Mortgage Insurance). One study showed that the average homebuyer only paid 6% closing costs. Most FHA loans only require 3.5% down. Fannie Mae has a 3% down morgage for first-time homebuyers. And if you’re active duty or a veteran of the military, you may be allowed to get a loan for $0 down with your VA benefits!
“Once we agree to a purchase price, that’s it. Negotiations are over.”
False. Negotiations can (and sometimes do) go right up until the time you sign the paperwork at closing. If you go through your final walkthrough of the home and find some repair we’d negotiated to be done that hasn’t been complete, we can still go in to closing to negotiate the cost of the repair to be taken out of the purchase price.
“A lower interest rate means a better loan.”
False. This one might feel true with interest rates soaring at the end of 2023 (hitting 8% for a brief period in October!), but it’s not. Why? Those lower interest rates could be coming with higher fees elsewhere. They may be charging you points to “buy down” the interest rate but pay more for the loan up front at closing. There may be other fees built into the more attractive-looking low-rate mortgage but costs more money in the long-run. So make sure when you’re choosing which loan option to go with, you’re carefully inspecting all the fees involved, not just interest rates.
“My Realtor can show me any house I like.”
True...ish. But often only if you’ve already been pre-approved for a loan. Listing Agents (the Realtor working for the seller) don’t want to waste time with potential buyers who don’t have the funds to be a real contender to buy the home. In fact, some homes can’t even be sold unless you can prove you have the funds in hand to pay for the home and - in the case of fixer-uppers - the costs for renovation as well!
These probably aren’t all the myths you’ve heard about home buying, but they’re the ones I’ve heard the most.
If you have more myths you’d like me to bust, or any other questions about homebuying (including hiring me to be your Realtor), you can reach out to me at [email protected] or call/text me at (734) 819-3257 and I’d love to help you out.