So you think you’re finally ready to make the jump from renter to homeowner? Awesome! In this exciting but admittedly scary time, you might be inclined to turn to friends and family for advice—especially if they own homes.
But beware, dear home buyer of the future: Those close to you might not be the experts you think they are. You could be heeding bad (albeit well-intentioned) advice without even knowing it.
So 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.
1. The First Step Is Looking For A Home
Perhaps you just want to get a feel for the area. You know, have something in mind before you sit down with a Realtor®. I mean, you’re not really looking yet, right? Stop right there. Even if you think you’re just browsing, you run the risk of setting your heart on something, only to have it broken. “A buyer might be viewing homes that are in a higher or lower price range than what they are qualified for,” says Connie Antoniou, a broker associate in Barrington, IL. Browsing is always fun, but when it comes to serious home-buying work, you need to make sure your credit is in top-notch shape before you get started for real. Also, don’t forget to get pre-approved for a mortgage before you embark on your home-buying journey. This will determine what your budget is.
2. Your Down Payment Must be 20%
Sure, a 20% down payment is ideal if you want to avoid that pesky private mortgage insurance otherwise known as 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 home buyers, you don’t have to be destitute. There are lots of different ways you can qualify for help on the local or federal level.
3. 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. But 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.
4. 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. “Just spend the money for a really thorough inspection, because in the long run it can save you a lot of money and time,” DeBianchi says.
5. Schools Don't Matter If You Don't Have Kids
We get it: You love the house, it’s in your price range, and you want to move fast. But there’s more to it than that. The neighborhood you choose matters—both now and later when you might consider selling. Even if you don’t have children, good schools are a sign of a good neighborhood. Also, check out the area’s walkability, your commute to work, and any other features that would make the hood a good fit for your lifestyle—now and a decade from now.
Courtesy of Realtor.com