There are numerous sources of information out there, but not all of it is accurate or up-to-date. Unfortunately, this means that potential homeowners may have to wade through a lot of myths and misinformation when it comes to house hunting. To help clear the air, our experts have debunked some of the top homebuying myths below.
Myth 1: You Need a 20% Down Payment
This is one of the most common misconceptions about buying a home — that you need a 20% down payment to qualify for a mortgage. The reality is that most lenders today require just 3.5% of the purchase price as a down payment. Some lenders may even offer loans with no down payment at all. Of course, if you can afford to put down more than 20%, doing so may save you from paying private mortgage insurance (PMI). But, if you don’t have the funds to cover that kind of down payment, don’t worry. You can still purchase a home with a much smaller down payment.
Myth 2: A Higher Credit Score Guarantees Approval
Another myth about getting a mortgage is that having a high credit score guarantees that you’ll be approved. While having a good credit score certainly helps, there are other factors that go into whether or not you’ll get a loan. Your debt-to-income ratio, employment status, assets, and loan repayment history all come into play as well. So, even if you have a great credit score, you still need to meet the other criteria to qualify for a loan.
Myth 3: You Have to Make a Ton of Offers Before You Find the Right Home
Many buyers fall victim to the idea that they’ll need to make a lot of offers before they find the right home. While it’s true that the number of offers you make could affect the favorability of an offer, the key is to be strategic. Take time to research the market and weigh your options before making any offers. With the help of a qualified real estate agent, you may be able to get the home you want without making too many bids.
Myth 4: Buying a Home Is Always More Expensive Than Renting
This is another misconception that often causes potential buyers to hesitate. In reality, owning a home is often more affordable than renting in the long run. Mortgage rates are lower now than they have been in years, and the cost of renting is continuing to rise. Plus, you’ll receive tax benefits if you own a home. These factors combined can make owning a home more economical than renting in many cases.
In conclusion, the home-buying process doesn’t have to be intimidating. Knowing the facts can help you make the best decisions and give you the confidence to make sure that you’re going to find the right home. Our experts debunked the top myths about buying a home and explained why these beliefs may be unfounded. Now that you’re armed with the truth, you can make educated choices about your house hunt.
This article debunks the top four home-buying myths, which can help prospective homeowners make informed decisions. The first myth is that you need a 20% down payment to qualify for a mortgage. Contrary to popular belief, most lenders require just 3.5% of the purchase price as a down payment. Additionally, some lenders may even offer loans with no down payment. The second myth is that having a high credit score guarantees approval. Although having a good credit score is important, there are other factors that affect loan approval, such as debt-to-income ratio, employment status, assets, and repayment history. The third myth is that buyers must make a lot of offers before finding the right home. This is not necessarily true; buyers can be strategic and do their research before submitting offers. Finally, the fourth myth is that buying a home is always more expensive than renting. On the contrary, owning a home is often more affordable than renting in the long run, especially due to current low mortgage rates and rising rental prices. In addition, owning a home offers tax benefits. In conclusion, understanding the realities of the home-buying process can help prospective homeowners make informed decisions and feel confident about purchasing a home.
This article was contributed on Dec 26, 2023
