Debunking Myths To Home Buying

Finally ready to make the transition into home ownership? That's exciting! And while it's common to turn to friends and family for insight into the home buying process, there's a lot of misinformation that's rampant, in addition to some not-so-great-but-well-meaning-advice, that I'd like to set straight! 

1. MYTH: THE FIRST STEP IS SEARCHING FOR A HOME
You know the saying, "Don't put the cart before the horse," well that's important to remember when it comes to buying a home. You don't want to start looking for a house until you sit down with a lender and discuss what the bank will qualify you for. If you fall in love with a house that's $250,000 only to find out that you currently qualify for $200,000 you can get your hopes crushed and waste a lot of time. Don't start the process on the wrong foot and make sure the numbers line up.

2. MYTH: YOU DON'T NEED A REAL ESTATE AGENT
Commissions are paid by the seller. That means that working with a buyers agent doesn't cost you a penny. YES! This is true! Commissions are set between the seller & the sellers agent before the house is even listed. Whether or not the sellers agent finds a buyer that does not have his/her own agent, the commission remains unchanged. This is so often misunderstood! Having a real estate agent on your side means you'll avoid outdated listings and scammers (there are lots of them), you'll be properly represented when it comes to navigating the legalities of contracts and buying a home, and you'll be represented in your best interest throughout the entire process. Why wouldn't you want an awesome negotiator working to ensure you get the best from the transaction? For FREE!

3. MYTH: YOU CAN'T BUY A HOME WITH BAD CREDIT
Within reason, this is a myth. Some lenders can work with credit scores down to the low to mid 500's but you have a better chance of qualifying if your credit score is at least in the 620+. I have lenders that I recommend that can help you to mend your credit--helping you to identify the payments & priorities to increase your credit score. There are a lot of factors that go into pre-approvals, but your credit doesn't have to be a sore thumb during the process.  

4. MYTH: YOUR DOWN PAYMENT HAS TO BE 20%
Think you have to sell an arm and a leg to buy a home? Not at all! An FHA loan only requires 3.5% while a conventional only requires 5%. There are a lot of programs that can potentially help you with down payment assistance, you can even put 0% down! USDA and VA loans are the most popular 0% down programs, although RI Housing also has some great options. If you qualify, this can take a big chunk off the amount of cash you have to bring to the closing table. RI Housing currently has a program for first time buyers, First Down, that offers $7500 towards closing costs or as a down payment assistance.

5. MYTH: DOWN PAYMENTS ARE THE ONLY UPFRONT COST
This is one of the biggest misconceptions. There are a lot of costs that go into buying a home that I want my clients to be aware of.  Once you have a home under contract, you will have 10 business days to conduct a home inspection. I will provide you with a list of home inspectors that I can confidently recommend who will inspect the structural & mechanical integrity of the home as well as conduct a pest & radon inspection. Home inspections range from $350-$700 depending upon the square footage. If you are getting a mortgage, the home will have to be appraises. An appraisal can range from $300-$700 dollars. You will also need to secure a home owners insurance policy & pay for the first year upfront. Home insurance for a single family is $1200-$1500. In addition to your down payment, you will also need to account for closing costs.  In certain situations,  closing costs can be negotiated to be covered by sellers, we will discuss the best strategy when we cross that threshold!

I'm happy to further discuss the home buying process, I hope that you find this information is useful!

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