Homebuyers tend to have a lot of questions about the real estate process as they begin the search for their next home. Unfortunately, some of the answers they find are more fiction than fact. Today, I’m going to dispel a few of these mistruths by sharing (and debunking) x of the most common homebuying myths:
Myth No. 1: “Buyers must submit a large downpayment.” While some may try to tell you that you’ll need upwards of 20% down to buy a home, there are programs out there that allow buyers to secure a property for little (or even no) money down. In general, buyers should plan to put between 3% and 5% down.
Myth No. 2: “Shopping around will lower your credit score.” Only consulting one lender about what you can afford is one of the worst things you can do as a homebuyer. If you want to get the best deal, you should always get a second opinion. Even though making inquiries into your credit may slightly lower it, this will only be temporary. Credit agencies understand that shopping around is necessary. Exploring your options during your home search won’t have any sort of long-term detrimental effect on your credit.
Myth No. 3: “Being pre-qualified and being pre-approved is the same thing.” A pre-qualification is just a general assessment of your financial circumstances; it doesn’t prove that you are truly capable of buying a home. The pre-approval process is much more involved. When you get pre-approved, your lender will ask for paperwork to officially verify your position as a homebuyer.
Myth No. 4: “You have to be debt-free to purchase a home.” If this was true, very few people would own homes. The truth is that so long as your debt-to-income ratio (i.e., the balance between how much you earn compared to how much you owe) is in good shape, your debt shouldn’t impede you from buying a home.
Myth No. 5: “It’s a bad idea to start preparing too far in advance.” Truthfully, it’s never too early to start planning for your next home purchase. And we would be happy to help you make those plans. We can answer any questions you might have about financing, the market, or anything else related to real estate.
So if you have any other questions or would like to learn more, please give us a call or send us an email. We look forward to hearing from you soon.