Owning a home comes with great benefits like price appreciation and tax advantages. Nonetheless, the home buying process can be very overwhelming. Especially for first-time homebuyers, purchasing a property can come with a lot of challenges.
However, if you are thinking of buying a home for the first time, you don’t have to fear the process. The key to having the smoothest and best journey towards home ownership is to be educated about how to prepare, and what to expect.
So, if you’ve been looking for reliable home buying tips, you’ve come to the right place. Keep reading to find out the truth about the biggest home buying myths.
First Time Home Buyer Benefits
Myth: Being a first-time homebuyer doesn’t come with any benefits.
Fact: There are many first-time homebuyers programs that can give you incredible benefits. These programs often offer financial assistance to help you get the home of your dreams.
Depending on the program, some of the benefits that you can get as a first time home buyer include:
- Low or no down payment loans
- Grants or loans for closing costs
- Federal tax credits
- Down payment assistance
Who Qualifies for These Benefits?
According to the U.S. Department of Housing and Urban Development, buyers who meet one of these guidelines can qualify for first time home buyer benefits:
- A buyer who has not owned a primary residence in three years before the purchase
- A single parent or homemaker who has only owned a home while married to a former spouse
- A person who owned a property that did not comply with building codes and is unable to bring it up to code
- A person who owned a property that was not affixed to a foundation
Loans and Mortgages
Myth: You don’t have to get pre-approved before going house hunting.
Fact: Although it might be very tempting to start looking for homes before you start the pre-approval process, you shouldn’t. Getting pre-approved is the best way to know how much you can afford. Skipping or delaying this step can cause the process to drag on for longer than it has to, and it might be the reason why your offers get denied.
Myth: You can make big life changes (financial) before and during the mortgage process.
Fact: You should abstain from switching jobs or quitting during the loan process. Making a major life change during this process might cause you to need a new loan approval, or it might cause you to be denied. Getting a promotion or raise at your current job is the only exception to this rule!
Myth: You can’t buy a house if you have student loan debt.
Fact: You can still finance a home if you have student loan debt. However, you have to keep up with payments. If you are diligent about getting payments in on time, you can show lenders that you are responsible.
Myth: Preapproval and pre qualification is the same thing.
Fact: Getting preapproved is not the same thing as being pre qualified. A prequalification letter is just a document that estimates the amount of loan you can get based on an informal evaluation. Preapproval lets you know exactly how much you can get based on your official documents.
Benefits of Pre-Approval
Once you get the official letter of pre-approval, you will know exactly how much you can afford. This is a huge advantage because you’ll be able to be more efficient during the house-hunting process.
Furthermore, you can show sellers that you’ve gone through the pre-approval process and that you are a serious buyer. This will make your offer look a lot stronger.
Myth: Downpayments are always 20%.
Fact: If you can, putting a down payment of 20% will help you avoid having to pay private mortgage insurance. However, nowadays a lot of lenders offer lower down payment options to qualified buyers. Today, most buyers put a down payment of about 6%.
Myth: You only have to save money for the down payment and monthly mortgage payments.
Fact: Although you do have to save up for a down payment, and you do have to make on-time payments on your loan, there are a few other costs that come with the home buying process. These are some of the other costs that you have to consider:
- Closing costs: these usually make up about 2%-5% of the price of the property
- Move-in expenses: this includes money for moving, repairs, furnishing, etc.
Myth: You don’t have to work with a real estate agent.
Fact: Working with a real estate agent will make the entire process of buying a home for the first time a lot easier. Real estate professionals know how to help you find the best options within your budget. Furthermore, they can guide you through the mortgage process as well, and make your life a lot easier overall.
Nowadays, anyone can access property search websites and look for homes. However, going through the process alone can be very stressful. A good agent will give you home buying tips, manage all negotiations with sellers, arrange and oversee inspections, and help make this process a lot less overwhelming.
Myth: You have to know exactly what you want before you go house hunting.
Fact: Having a general idea of what you are looking for can be helpful when you start looking for properties. However, you don’t have to know exactly what you want right away. Make a list of things you absolutely need, things you want, and things that would be nice to have.
If you are not entirely sure of what you are looking for, ask your agent to start showing you some properties and create the list as you go. Sometimes it is easier to figure out what you don’t want in a house than what you do want.
Myth: You don’t have to consider how long you’ll be living in the home you purchase.
Fact: You should have a general plan of how long you are planning on living at a property. Knowing this will help you make better long-term decisions. For example, if you are planning on having kids while living in that house, you might want to consider buying something with extra rooms.
Making an Offer
Myth: The offer you make on a house has to be the asking price.
Fact: If you have been preapproved, have a good credit score, and a down payment ready to go, sellers will be more willing to negotiate the price. Once you find a home you’d like to buy, talk to your agent about crafting a good and competitive offer. This does not have to be the exact asking price, but good initial offers usually come close to it.
Myth: You can take your time and wait to make an offer on a house you liked.
Fact: When you find a house that you really like, you should not wait around to make an offer. There are usually several buyers interested in the same property. Therefore, if you have been preapproved and know that the house you are looking at is “the one,” you should make a competitive offer to make sure you don’t miss out.
Myth: Verbally agreeing on a price with the seller will hold your dream house.
Fact: Simply saying “yes” to a seller in person or over the phone will not guarantee that you get your dream house. For a deal to be finalized, you have to take action and sign the contract.
Renting Vs. Buying
Myth: Renting is always cheaper than buying.
Fact: Although there are some costs associated with becoming a homeowner, buying a home is an investment. Sure, renting is a great option if you are someone who likes to move around a lot. However, if you want to have total freedom of your space and establish roots, buying a home could be the best option.
In addition, homes usually increase in value over time. With the right assistance, becoming a homeowner can be an incredibly smart financial decision.
Found these Home Buying Tips Helpful?
Now that you know what myths to stop believing about the home buying process, you’ll have a much easier time on your journey towards home ownership. Being a first-time home buyer can be very overwhelming. However, knowing what to expect during the process can make it a lot easier to navigate.
We hope these home buying tips were helpful. If you are looking for more tips and tricks to help you out during the home buying process, make sure to us out of RealFi Funding
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