Are you beginning to consider home ownership? If so…FANTASTIC!  During this exciting time, you might be turning to friends and family who have been through the process for an insight. However, everyone’s home buying experience is different and there are many factors that can change the experience for each buyer like market area and when they purchased the home.  With so many things that can impact the process, it’s easy to see how misinformation can be easily spread, so I’m here to clear up a few of the most common myths.

1. THE FIRST STEP IS SEARCHING FOR A HOME

You know the saying, “Don’t put the cart before the horse.” Well, that’s especially important to remember when it comes to buying a home. Don’t start looking for a house until you meet with a lender to discuss what your ideal budget is and for how much the bank will pre-approve you.  Nothing feels worse than finding your $250,000 dream home only to find out the maximum you’re approved for is $175,000.  Your hopes will be crushed and your time wasted because other homes that you can afford will no longer measure up. Make sure the all numbers line up before you get started.

***Side note: Online mortgage calculators are rarely as accurate as meeting with a lender.  They don’t take into account taxes, title, insurance and many other fees associated with a home purchase that a lender can and will account for.***

2. YOU DON’T NEED A REAL ESTATE AGENT

Buyers very rarely pay for using a real estate agent. Typically, the buyer’s agent gets paid from the commission that the sellers agreed to pay their agent when listing the home. Only in very rare and specialized circumstances will a buyer be responsible for paying for an agent’s services. That means you will be represented by a qualified real estate professional at NO COST to you. Having a real estate agent on your side means you’ll get to see homes that aren’t as readily available on public searches. You avoid outdated listings and scammers (there are lots of them), you have an expert advisor and negotiator assisting you in making offers, and you have protection when it comes to navigating the legalities of contracts and buying a home. Why wouldn’t you want an awesome negotiator working to ensure you get the best from the transaction? For FREE!

3. YOU CAN’T BUY A HOME WITH BAD CREDIT

Fortunately for some, this is a myth. There’s a ton of mortgage lenders out there who can help all kinds of home buyers and, although there are fewer loan options for those with lower credit scores, many lenders can work with scores as low as the mid 500’s. Get in touch with an agent to help connect you with the right lender who specializes in this area and can help you potentially get approved. There is a variety of factors that go into approvals and your credit doesn’t have to hold you back. However, you will be doing yourself a favor if you connect with a credit repair specialist to at least get those numbers in the 600’s. A better score will lower you interest rate and potentially some fees.

4. YOUR DOWN PAYMENT HAS TO BE 20%

Think you have to sell your first born to buy a home? Not at all! An FHA loan only requires 3.5% while many conventional loans only require 5%. There are plenty of down payment assistance programs available for qualified buyers, too.  There’s even programs for 0% down payment.  USDA and VA loans are the most popular 0% down programs currently available. If you qualify, this can take a big chunk off the amount of cash you have to bring to the closing table.

5. DOWN PAYMENTS ARE THE ONLY UP FRONT COST

This is one of the biggest misconceptions. There are a variety of costs that go into buying a home before you even get to the down payment. One up front cost you won’t be able to avoid is the appraisal. If you are getting a mortgage, every lender requires an appraisal to be done as part of the loan approval process.  An appraisal can range from $300-$700 dollars depending on the type of loan, your market area and size of the home among other things. You will also want to get a home inspection.  The inspection helps you learn more about the home you’re about to purchase and gives you time to discover anything that could be seriously wrong with it that’s not obvious during a showing.  A quality home inspection will cost anywhere from $300-$600 depending on the size of the home.

Aside from your down payment, you then have to pay for closing costs. And NO, they are not the same thing. Closing costs can range anywhere between 3-6% of the purchase price. In certain markets, this can be negotiated for sellers to cover by rolling into the offer price, but whether that decision is smart to do or not when it comes to landing your dream home will need to be discussed with your agent.

Now that you have some basic knowledge to get the process started, contact me at Rachel@RachelKayla.com.  I can help get you started on your search if your in Central Ohio or connect you to a qualified agent in your area if you’re not.  Happy house hunting!