Buying a home is likely one of the largest and most important purchases you’ll ever make. Committing to such a high dollar amount can be nerve-wracking, especially if you believe in certain homebuying myths. Thankfully, there are knowledgeable professionals and resources available to help you along your homebuying journey. To start, we’ll help you dispel some of the most common homebuying myths.
Myth 1: You Need a 20% Down Payment
One of the strongest prevailing homebuying myths is that you must have a minimum 20% down payment. In reality, today’s lenders offer a variety of loan products that require very little or even zero down payment. These types of loans are ideal for first-time home buyers who may not have a lot to spend up front.
Admittedly, a 20% down payment is great if you want the most favorable pricing and control over when you pay taxes and insurance. Otherwise, you may have to pay for private mortgage insurance (PMI) and add your property tax and insurance payments into your monthly payment, rather than paying them twice yearly. The PMI, taxes, and insurance can add a significant amount to your monthly principal and interest payments, so it’s important to factor those in when you consider purchase price and the type of loan you choose.
Myth 2: You Don’t Need a Real Estate Agent
Casually attending open houses is fine, but if you’re serious about buying, you should be serious about finding a professional real estate agent. Having an expert in your corner can help you way more than you realize. Not only will an agent have access to more available homes in your search criteria, they’ll have researched the comparable prices for other homes in the area. An experienced agent will get you the best deal possible—and they’ll guide you through the process from searching for a home to handing you the keys.
Myth 3: Your Only Upfront Cost is the Down Payment
Many first-time homebuyers misunderstand how much their out-of-pocket expenses will be. Believing the homebuying myth that you only need to save for a down payment will leave you sorely surprised when it’s time to sign your loan documents. Why? Well, in addition to the money you put down, there are many other costs and fees that must be paid at closing. These costs typically add thousands of dollars to what you already committed for your down payment. Again, this is where professional guidance is key. Having an experienced agent and lender can ensure you choose a home in your budget, you have enough in the bank to cover upfront costs, and you obtain a home loan that makes sense for your financial situation.
Work with Experts to Avoid Being Duped by Homebuying Myths
There are many more homebuying myths than the ones we addressed here. But you needn’t worry as long as you have experts to help you through the process. Find an experienced agent who knows about the area you’re looking to buy in and has a track record of success. Work with a credible lender that helps you determine the best loan for your situation. And if you hear a bit of information that sounds like a homebuying myth, reach out to your team for clarity. With patience, research, and expert negotiation, you’ll be home sweet home in no time.
Compare Your Options
Buying a home is one of the most important purchases you’ll ever make. As such, it is vitally important to do as much research as possible to find the right loan for your needs. With so many options available, turn to your Credit Union for expert guidance throughout the process. Contact us at mortgage@orangecountyscu.org or (800) 506-5070 to speak to a Mortgage Loan Consultant today.