10 Homebuyer Myths Debunked!
From the first tour or open house to securing a mortgage to closing day, purchasing a home is a complex and daunting process. Here are 10 myths that home buyers should clear from their heads to maintain realistic expectations during the home-buying process.
FACT: As home prices climb, home buyers have a tougher time accumulating a cash down payment that amounts to 20% of the typical purchase price. The good news is that you can usually get your dream house with a smaller up-front payment. The downside, however, is that you’ll have to buy either private mortgage insurance or government insurance for at least a few years. CAUTION: This insurance can add hundreds of dollars to your mortgage payment each month. Be sure to inquire with a preferred lender to know exactly what your bottom line will be.
FACT: Yes, your parents probably had a fixed, 30-year term on their home loan, and they may even have stayed in the house long enough to pay it off. However, other financing options have increased in popularity, giving home buyers real advantages—and much lower interest rates—with 15- or even 7-year loans. Be sure to explore all mortgage options with your preferred lender when getting your pre-approval to buy a home.
FACT: Sure, sellers love the simplicity of accepting a big pile of cash instead of having to deal with buyers who need financing. But an all-cash offer isn’t a guaranteed winner. Home buyers who are willing to outbid an all-cash offer certainly have a decent shot at nabbing the house.
FACT: Even buyers who don’t have school-aged children should think twice before moving to a neighborhood with poorly ranked schools. Great school districts make for highly coveted neighborhoods, so when you’re ready to sell your home in the future, the next buyer may be willing to pay a premium to be in your district. So, before you buy, take time to study up on the quality of the nearby schools.
FACT: The strategy of searching for a low-priced steal in high-priced ZIP code isn’t always the best game plan. If the cost of making the house livable will be sky-high, or if it has too many drawbacks that can’t be fixed (for example, if it’s located next to an interstate or a noisy business), then the house may not be such a bargain after all.
FACT: Far too often, inexperienced buyers agree to waive the inspection in a hurry to nail down a deal or win in a bidding war. DO NOT fall for this! Skipping the inspection is almost always a mistake. Far from a mere formality, an inspection is a great way to slow down the purchase process, uncover major problems with the house before completing the sale, and find ways to negotiate the final price. Don’t omit this vital step.
FACT: Sure, spring is the most active time for real estate sales in the Charlotte area, primarily because both sellers and buyers are preparing for the summer moving season. However, there’s simply no need to wait until the daffodils or the tulips bloom, though, to begin your home search! House-hunting in the summer, fall and winter may actually save you money as a Charlotte home buyer because you’ll be competing with fewer potential buyers, which should anchor prices for you.
FACT: While home buyers can certainly find listings online, they may be better off working with a buyer’s agent instead. Buyer’s agents do more than just show what’s for sale. They also give the lowdown on comparables in the market, help steer buyers away from properties that have potential problems, and provide guidance during the negotiation phase. It’s always a smart idea to have an experienced pro on your side.
FACT: So, the buyers have told the seller what they’re willing to pay, and the seller has accepted. While both parties have agreed to the Offer, it’s still not set in stone. If house-related issues turn up during the inspection, or if the seller asks for an unusually fast closing, the buyer may be able to shave hundreds or even thousands of dollars off the price.
FACT: Before buyers start looking for houses in earnest, they’ll probably go through a bank’s pre-qualification process to find out how much money they can borrow. Be aware, however, that banks don’t always disclose how theoretical this number can be. Once the bank completes a more heavy-duty vetting of a buyer’s finances, it may decide that it’s willing to loan less than originally planned—or even nothing at all.