Debunking 5 Common Home Buying Myths
Navigating the path to homeownership is both exciting and nerve-wracking, especially for first-time home buyers. While it’s common for friends and family to offer their personal advice for navigating the residential real estate market, it’s also important to find a trusted mortgage lender to help you every step of the way.
Let’s debunk five common home buying myths that prospective buyers should ignore.
- The First Step Towards Homeownership Is House Hunting
While this all-too-familiar statement seems harmless, touring properties before you truly understand how much house you can afford may ultimately lead to disappointment. We encourage buyers to utilize a mortgage calculator in an effort to determine a comfortable monthly mortgage payment (including taxes, insurance and PMI, if applicable).
Once a buyer has completed this task, it will become much easier to determine which homes are worth viewing.
- Your Down Payment Must Be 20% of the Purchase Price
While striving for a down payment of 20% of the purchase price is certainly commendable, plenty of people purchase homes without a sizable down payment. Buyers without a 20% down payment most likely will have to pay for Private Mortgage Insurance (known as PMI) until enough of the mortgage’s principal has been paid.
Typically, a PMI payment is equivalent to 0.05%-1% of the annual mortgage and is typically wrapped into the monthly mortgage payment.
- The Only Major Cost of Purchasing a Home Is the Down Payment
In addition to a down payment, buyers will be responsible for a number of fees including taxes, inspections, credit reports, insurance, etc. In some cases, a buyer may even be responsible for closing costs, which range anywhere from 2%-5% of the purchase price.
Ultimately, it’s important to work with a mortgage lender that fully understands your personal financial situation and is willing to guide you every step of the way, from placing an offer to closing on your dream home.
- A Home Inspection is NOT Necessary
The home inspection is a crucial (albeit expensive) part of the home buying process that should not be skipped. Buyers should be aware of any potential issues with the property, even issues they may not be able to see (e.g. electrical wiring, missing shingles, plumbing problems, etc.). While some buyers may view waiving a home inspection as a way to make their offer look more attractive to a seller, skipping this step may cost the buyer dearly in the long run. If the property needs a new HVAC system, roof, or other costly repair, it would be best to plan for this expense prior to purchasing the property.
In many cases, if a major repair need is found during the home inspection, the seller may agree to lower the purchase price of the home to accommodate the repair. Regardless, a home inspection protects the buyer, at least initially, from purchasing a home that is in major need of unforeseen repairs.
- Liking the Home Is More Important than the Neighborhood
Many times, prospective home buyers fall in love with a home that checks all of the boxes in terms of design and functionality without taking into account the neighborhood, school system, tax rate, crime rate, proximity to restaurants and retailers, etc. Home buyers must take the time to determine the type of community that would be the best fit (not just the home itself). At the end of the day, the initial excitement and love for your home will dissipate if you are unsatisfied with the community in which your home is located.
At GoPrime Mortgage, our ultimate goal is to help families on their paths to homeownership. Contact one of our local lenders in your community today to determine which type of home loan is best for you.