Buying a home can feel like an intimidating process, and that goes double for anyone who’s embarking on homeownership for the very first time. There’s so much you don’t know that “overwhelming” hardly seems like an appropriate description of how it feels. Having a dedicated Realtor® to guide you through the process will make the home-buying experience less stressful and even, dare I say, exciting!
Thousands of people purchase real estate each day and so can you! Be wary of falling for these common misconceptions first-time buyers are prone to.
1. Thinking you don't have enough money to put down on a home.
The biggest headache for so many first-time buyers is the down payment. If you’ve ever bought a car, then you’re probably familiar with the concept -- it’s money that you contribute to the total cost of the purchase.
- While the more you can put down on a home, the less your monthly payment will be, many of us don't have tens of thousands (or more) sitting in the bank. In recent years, mortgages have become more available to first-time homebuyers. From 100% financed mortgages to FHA loans, and local grants to assist renters in getting their foot in the door of homeownership, there is a myriad of home loan products for buyers of all walks of life.
- Most banks require at least a 20 percent down payment before they will waive the need for PMI on the loan. PMI is short for Private Mortgage Insurance, a policy added to your monthly payment to insure the mortgage in the event you become unable to pay. The good news is, even with PMI included in the payment, buyers can oftentimes stay within their monthly budget and still be able to purchase a home of their own.
2. Not knowing your credit score or purchasing power
Between the amount of money you plan to put down on the home, the potential PMI and other cost factors, your monthly cost could be significantly more (or possibly less) than some of those online calculators will show you online. For instance, property taxes vary significantly from one locale to another.
So before you trust those “estimated monthly mortgage loan amount” numbers that you see popping up next to your potential new dream home on Zillow or a brokerage website, it pays to figure out what you can actually afford -- and that means getting prequalified for a home loan.
This means you will need to talk to a mortgage loan officer and submit a slew of documentation, from your monthly pay stub to your credit score, in order for that loan officer to tell you how much money you can get for your home loan. It’s a little bit painful, but the prequalification letter you’ll get as a result is much more credible than a quick qualification you can pull up on an app -- and that means sellers will take it more seriously when it comes time to put in an offer.
3. Not finding a qualified Reator®
It’s so easy to find homes online these days that you may wonder why a real estate agent is even necessary. After all, isn’t the hard part -- finding the place you want to buy -- something you can do yourself?
Well, maybe. But in areas with red-hot markets, you’re probably not seeing the most updated listings -- that home you just fell in love with online might be under contract before you can set up a time to tour it.
Not only can a Realtor® make sure you have access to listings the second they hit the MLS, but a qualified agent should also provide expertise on finding the home that makes you fall in love, to providing vendor referrals such as quality inspectors and lenders that offer loan products that meet your needs, and more, a qualified agent is an invaluable resource.
4. Not in the right Mentality: "It makes more sense to keep renting" or "The market is going to drop, I'll wait it out"
A common misconception is to wait out the market and see what happens. The reality is, every month you pay rent, you are spending money you will never see again, to pay someone else's mortgage. While property values wax and wane, and you probably know someone who knows someone who got a "crazy deal" on a home, the reality is, buyers will typically pay what the market will bear, also known as the market value, when purchasing a home. And while home values can dip at times, they ultimately climb back up and provide equity over time, offering a nest egg for the owner to draw from when the time comes. So why continue to pay for your landlord's future? Instead, invest in your own home and start seeing those monthly payments come back to YOU in years to come.
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5. Not understanding what’s fixable and what’s a deal-breaker
Those drop panels in the ceiling are hideous, and you can’t imagine how anyone can fit into that minuscule bathtub. Are those annoyances that can be fixed or deal-breakers that mean you should pass on the property entirely?
This is another area where a good real estate agent can help. They see so many houses in various stages of repair and updating that they can show you where you can claim another foot or two for bathtub space (and help you figure out how much it will cost and who’s trustworthy enough to take on the job) or let you know that the ceilings are too low for any changes to make much of a difference.
Chances are, you're guilty of at least two of these common misconceptions. You know what, that's okay? Real Estate is an intimidating task to take on for first-time homebuyers. The good new is, it doesn't have to be. By choosing a reputable Realtor®, you'll be in your new home in no time!
