Posted on: 24 February 2017
Are myths and half-truths keeping you from owning your dream home? Here are some things people believe about homeownership even though they aren't true:
You Need A 20% Down Payment
Unless you are buying your house in cash, you will need a down payment before taking out a mortgage. Most people believe that lenders require a 20% down payment, but this isn't necessarily true. It's true that most lenders want a 20% down payment since it increases your investment in the property and makes you less likely to default or mismanage it. However, plenty of lenders can sign your mortgage with lower down payments. In fact, the Federal Housing Administration (FHA) can go as low as 3.5%.
Your Income Determines Your Maximum Mortgage
Many people also believe that only those with astronomical incomes can afford expensive houses because they qualify for higher mortgages. The truth is that mortgage determination depends on multiple factors; income is just one of them. Other factors that lenders consider include credit rating and debt-to-income ratio. Therefore, if you have stellar credit, you may qualify for a substantial mortgage amount even if your income is moderate.
The Seller Will Repair the Faults Listed In the Inspection Report
A home inspection is a crucial aspect of any home purchase process; you shouldn't skip it. The inspection will reveal to you any defects in the home. Most people think that sellers are obligated to fix the defects listed in the inspection report, but that isn't the case. You use the information to determine whether to proceed with the purchase as it is, negotiate a lower price, or cancel it. Some sellers like to fix those defects because they don't want the buyer to cancel the deal or the next buyer to see the defects, but this decision is entirely up to the seller.
The Only Upfront Cost You Need Is the Down Payment
Lastly, there is also this misconception that if you are buying a house, you are good to go if you have the down payment and the lender has advanced you the mortgage. Unfortunately, the down payment isn't the only upfront cost you will incur in your home purchase. You also have to pay for the closing costs, which can be as high as 5% of your home's price. The closing costs are the fees associated with the purchase; they include things like appraisal fees, legal fees, and escrow deposit for property taxes, among others.
Do your research and talk to a real estate professional at a company like Roger Deines Real Estate Group ReeceNichols before treating something as "common knowledge." You may just be lucky enough to find that there is nothing (other than your mistaken beliefs) holding you back from buying your dream home.Share