Top 5 First Time Home Buyer Myths
Updated: Jan 18, 2021
Thinking of buying in 2021? I've debunked the top five first time home buyer myths below.
If you're thinking about buying a home chances are you've received a lot of well intended/free advice from family and friends. Though great to receive, things are constantly changing in the world of real estate. Things could be different now from when they purchased a home. Add this to the popular HGTV shows we love (that often over simplify the home buying process) you can be left having difficulty distinguishing fact from fiction. Buying a home is a huge financial decision, but it doesn't have to be a scary one! If you prepare yourself with knowledge and a qualified team of support professionals, you can be confident taking the leap into home ownership. With all that being said.....
DON'T FALL FOR THESE HOME BUYER MYTHS!!!
MYTH #1: You Need a 20% Down Payment In the past, first time home buyers were required to put down 20% of the total cost of the property to purchase a home. Not today! In fact, 7 out of 10 first time home buyers put down 5% or less. There are multiple loan programs that offer lower down payments-even no money down! A lender can discuss your options with you and determine which program would be best for you. MYTH #2: You Need a High Credit Score to Buy a House You don't need perfect credit in order to purchase a home. There are certain loan programs that people with lower credit scores can qualify for. These are great options for people who have had credit issues in the past and could get you into home ownership sooner than you may think. MYTH #3: You Cant Qualify for a Mortgage if You're Still Paying Off Student Loans When you're applying for a mortgage, a lender will take a close look at your debt-to-income ratio. To calculate this on your own, add up all your monthly debt payment and divide those by your monthly income. If your income is high enough to allow you to make those payments each month on top of your new mortgage payment, having a student loan will most likely not stop you from getting a loan. MYTH #4: Your Only Upfront Cost is Your Down Payment While your down payment is a large portion, it is not the only money you'll be required to spend during the buying process. At closing you will also be required to pay for closing costs required to obtain and close the loan which includes homeowners insurance, title fees, attorney and lender fees and more. Closing costs are typically anywhere from 3-6% of the total purchase price of the home. Before closing you will have to pay for an inspection which is typically a few hundred dollars depending on size of the home. Your lender will also require an appraisal to verify your purchase price. It typically is around $500 and depending on the lender is paid upfront or included in closing costs. MYTH #5: It's Less Expensive to Rent Actually, there's a good chance that your monthly payments will be the same or lower than they are right now. And unlike Atlanta rental rates, your monthly principle and interest payments will stay the same for the life of the loan. Also you will be building equity in your home, which is wealth that you can use for investments in your future!
If you have any questions about any of these topics, please don't hesitate to reach out. I'll be happy to go over in more detail!