5 Home Buying Myths You Need to Know
Read about how the top 5 myths
to be aware of when buying a home
Home buyers usually get lots of advice, some good, some
bad. As a result, myths can pop up and negatively guide the home purchasing
experience. Below is a summary of the most common home buying falsehoods you
should know about, especially in the current sellers’ market.
1. The only upfront cost is the down payment.
Buyers need to be prepared for several expenses: fees, taxes, costs for
inspections, credit reports, insurance, and others. A good way to start
evaluating the cost of buying a property is to get:
1-1 An estimate of the title/escrow fees. Your
real estate agent should give you this information upfront;
1-2 Review carefully the three-page loan estimate
form you will receive from your lender after applying for a mortgage. The loan
estimate tells you important details about the loan you have requested
including the amount of the mortgage origination fee charged by the lenders as a
compensation for processing your loan application. Your lender must give you a
loan estimate statement within three business days of receiving your
application.
2. Just looking for a house casually is not a big
deal. Some people may want to start looking at homes to get a feel for the area
before they sit down with a real estate agent. Home shoppers, even at the
earliest stages, should always get pre-approved for a loan so they know their
budget from the get-go and don’t waste time looking at homes that are out of
their price range.
3. You must have a 20% down payment. A 20% down
payment will help a buyer avoid paying private mortgage insurance. Untrue: many
lenders will still qualify a home buyer with 10 % or 5% down. Some buyers can
even qualify for only 3.5% down with a Federal Housing Administration loan.
4. Schools shouldn’t matter if you don’t have
kids. False: the neighborhood you choose matters both now and later when you
might consider selling. Even if you don’t have children, good schools are a
sign of a good neighborhood. Buyers should always explore all factors with
their agent on items that could influence a home appreciation and desirability,
so they don’t run into trouble later on the day when they try to sell.
5. You don’t need a home inspection contingency
even if the sellers did not perform the home inspections prior to put the property
on the market. When the housing market is competitive, some home shoppers may
be willing to waive the home inspection contingency in order to get the home
they want. This can be dangerous for home buyers when the sellers did not pay
to have the house inspected as all properties are sold “As Is" in our county.
This provision of the purchase contract basically puts buyers on notice that
the seller is making no warranties about the quality or condition of the
property. It relieves the seller from liability for any defects in the
property's condition.
In a nutshell, when buying a home, always ask your
agent to point out all the potential pitfalls of the home buying process
instead of believing in common myths.
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