How to Buy a House. Common Misconceptions First Time Buyers Have About Purchasing a Home

Buying your first home is an exciting time. You’re close to finally realizing your dream of home ownership. Hire a Realtor and get a mortgage, that simple, right? Not exactly. Here are common misconceptions first time buyers have about purchasing a home and common first time buyer mistakes to avoid when learning how to buy a house.

You need a 20% down payment to get a mortgage

When learning how to buy a house many first-time home buyers believe you still need a 20% down payment before you can get approved for a mortgage. While that used to be true a few decades ago, that’s no longer the case these days. Many years ago, home loans were only for people with perfect credit and a 20% – 50% down payment. The Government wanted more American’s to be able to achieve the dream of home ownership. They created the Federal Housing Administration which offered “FHA Loans”, and Fannie Mae and Freddie Mac to offer conventional loans.

You need a high credit score to qualify for a home loan

Again, this used to be true many years ago, but lenders have lowered their credit score requirements for mortgages. While some mortgage loans such as conventional loans still require a 620-640 score. FHA loans are available to buyers with lower credit scores. Not sure what your credit score is? Contact us and we can help you learn how to buy a house by tracking your credit score and the minimum needed for down payment assistance.

You can save money by not using a real estate agent

When learning how to buy a house it’s important to know how important Realtors are to the home buying process you can’t afford to not have an agent on your side. Real estate agents do get a commission, but the home buyer does not pay their fee. It is paid by the seller and is built into the selling price. Your agent is so important in helping you find a home, research the home, negotiate the price, the closing date, the earnest money, the inspection response, the re-inspection and walk-through. Since you do not pay – why not have your very own?

It’s cheaper to rent than it is to buy

Rent prices are skyrocketed over the last few years making the cost of renting about the same as mortgage payment would be. There are much higher up-front costs associated with home buying. When understanding how to buy a house these factors are important. You have the down payment, closing costs and fees, and mortgage insurance. However, over the course of 4-5 years buying is cheaper than renting. If you plan on staying in the same property for at least 5 years, then buying is considerably cheaper than renting is.

Buying a home that needs a lot of renovating will be cheaper

Everyone has seen the HGTV shows where people buy an ugly home for cheap and renovate it and make it into their dream home. While this is sounds, and looks easy, it rarely every happens. Tearing down walls and completely redoing kitchens are much more difficult and expensive than they appear on Television. Make sure you like the house how it is. If it is cosmetic like new carpet or paint, that’s easy. If you need to tear down walls to make it look nice then it’s best to move on.

Looking to learn how to buy a house? Don’t forget to ask us about how a renovation loan works. You can do a renovation as a purchase or as a refinance. This is not a DIY program. It requires a licensed and bonded contractor that will get the work done. At the end, it will be like a new home and you will be able to enjoy it sooner than if you tried to do a little at a time by yourself. Contact us about more details.