Despite the many challenges of buying a home, including strict credit requirements and saving for a down payment, it remains the American dream. Homeownership has always been an excellent way to build long-term wealth. Still, in recent years, it has become increasingly difficult to achieve.
If you’re in the market for a new home, you must separate fact from fiction. There are a lot of myths about the home buying process floating around out there, and if you believe them, they could cost you time, money, and stress. In this blog post, we’ll dispel some of the most common home buying myths so that you can confidently approach your purchase.
Myth #1: You Need a 20% Down Payment to Buy a Home
One of the most common myths about buying a home is that you need to have a 20% down payment before you can even consider getting a mortgage. While a 20% down payment will help you avoid having to pay private mortgage insurance (PMI), it’s not required to qualify for financing. There are plenty of low- and no-down mortgage options available, so don’t let the lack of a 20% down payment deter you from exploring your homeownership options.
Myth #2: You Don’t Need the Help of a Realtor
Often, buyers believe they can save money by avoiding using a real estate agent. The truth is that using a trusted and experienced realtor will actually save you time and money in the long run. A good realtor will be intimately familiar with the local market and can help you find the perfect home at the right price. They’ll also be able to negotiate on your behalf and help you avoid any potential pitfalls throughout the home buying process. Their expertise in helping people buy and sell homes daily is invaluable, so don’t try to do it alone.
Myth #3: Your Credit Score Needs to be Perfect
Your credit score is one factor that will be considered when you apply for a mortgage loan, but it’s not the be-all-end-all. A higher credit score may give you a better interest rate on your loan. However, even if your score isn’t perfect, you may still be able to qualify for financing. The most important thing is to have a strong history of making on-time payments on all of your bills—this will go a lot further than having a high credit score when it comes time to apply for a mortgage loan.
Myth #4: You Can’t Buy a Home Unless You Have Excellent Job Stability
While having steady employment is definitely an essential factor in qualifying for financing, it’s not necessarily required—especially if you have other assets that can offset any employment instability. If you’re self-employed or work on commission, as long as you can provide documentation of your income over the past two years, you should still be able to qualify for a loan. The bottom line is that as long as your income is consistent and reliable, job stability shouldn’t be an issue when it comes time to buy a home.
Myth #5: It’s Better to Buy the Most Expensive Home You Can Afford
This myth is perpetuated by the common wisdom that your home is an investment. While it’s true that in many cases, your home will appreciate over time, it’s not always a good idea to buy the most expensive home you can afford. Not only will this leave you with very little wiggle room in your budget, but it could also put you in a difficult financial position if the housing market takes a turn for the worse.
Myth #6: All Mortgage Lenders are the Same
Another common myth about getting a mortgage is that all lenders are the same, so it doesn’t really matter who you go through. The reality is that there can be quite a bit of variation from one lender to the next, so it pays to shop around. Some lenders may be more lenient with their credit requirements, while others may offer lower interest rates or down payment options. It’s important to compare offers from multiple lenders before making a decision—this way, you can be sure you’re getting the best deal possible.
Final thoughts
There are a lot of myths swirling around out there about the home buying process—but don’t let them deter you from exploring your homeownership options. No matter what your current situation may be, there’s likely a path to homeownership open to you—so don’t give up on your dreams of becoming a homeowner just because of some myths about the process.
