Tuesday, October 18, 2016 / by Jenel Yeamans
What is keeping you from buying a home?
I have heard SO many misconceptions of why people aren't buying a house in this phenomenal market. Venturing down the path to home ownership doesn't have to be like a hand at The World Series Of Poker. If you have the right agent, lender, and home inspector in your corner, it can be fun, easy, and stress-free. Here are some of the common myths that are deterring folks from buying a home right now:
1. You need to put at least 20% down.
Although it is true that most conventional loans require a 20% (but can be as low as 5%) down payment, there are a handful of loans out there that cater to different financial situations. It’s not uncommon to be short some savings when it comes to thousands of dollars. You can typically qualify for an FHA or VA loan or a down payment assistance program and put as little as 3.5 or 0% down.
2. You need amazing credit.
In order to get the best mortgage rates available, you usually have to have great credit. The lower your credit, the worse the rates available to you become—and if it’s low enough, you might not even be offered a loan at all. However if you want to become a homeowner before you can repair your credit, there are options. The credit guidelines for an FHA loan are much more lenient than for most conventional loans. Your credit score can be as low as 580 to qualify (and you’ll only be required to pay 3.5 percent down).
3. The seller pays the closing costs.
Many people have probably heard from family or friends that the seller of the home they bought covered their closing costs. While this can be true in many cases, it’s just as common for the seller to not agree to pay for them at all. It’s important to be educated on the amount you need to provide upfront for costs such as a credit report, inspection costs, title services, appraisal fee, escrow fees, and property insurance. Typically, buyer's portions of closing costs are 3% of the purchase price of the home. Having a great buyer's agent on your side can help you negotiate and get you the lowest possible fees.
4. The seller has to make repairs based on the inspection report.
Your real estate buyer's agent will assist you as much as they can when it comes to negotiating repairs after a home inspection, but you won’t always be so lucky. If they won’t hire someone themselves to do the repairs before you close, and then won’t offer you cash-back credits for you to hire your own professional to come in, you’re probably on your own. This is the “take it or leave it” (and not necessarily that common in today's market) approach, and either they’re in no rush to sell, have a poor agent themselves, can wait for more offers to come in, or they already have multiple offers on the table (one of which may not have asked for as many repairs).
5. It's cheaper to rent than buy.
This is one of the most controversial topics surrounding buying vs. selling, and it really does come down to a personal decision. However, studies show that in today’s market, rent prices are actually increasing faster than home prices—and if you had to choose between paying a landlord monthly or paying your own mortgage bill monthly, wouldn’t you rather that money go to YOU and your personal assets in the end over a stranger’s? Of course, renting comes with the flexibility of moving and doesn’t come with the cost of repairs and improvements, but owning comes with a potentially lifelong investment and endless customization. And while buying may not be cheaper than renting in all markets (like Seattle), it’s important to contact an agent and a lender to go over your options and the decide what's best for you.
If you are a believer in any of these myths or have heard of some others that are keeping you from buying a home today please call me so we can chat about your goals.
Nykole Larson Real Estate Group