Common Real Estate Myths, Continued
Last week, we published a few common real estate myths relating to the current housing market. In an effort to clarify some common misconceptions that we frequently hear, we put together another list of common real estate myths and the reality behind each of them.
MYTH: You need to put 20% down when purchasing a home.
TRUTH: Some loan types offer the option to put as little as 3.5% of the purchase price down. This option does depend on the buyer's credit score and the down payment requirement may vary. For example, FHA loans will accept between 3.5-10% of the purchase price as a down payment depending on the buyer's credit score.
MYTH: You need perfect credit to buy a home.
TRUTH: You do not need a perfect credit score to buy a home. Depending on the lender and your credit score, you may be required to pay a higher down payment. In general, having a higher credit score will increase your chances of approval and a lower interest rate in comparison to a lower credit score.
MYTH: You should wait until the spring season to buy or sell a home.
TRUTH: The Real Estate market over the last two years has been deviating from the not-to-distant past market norms. Due to low inventory and high demand, there has been a steady flow of buyers and not enough sellers. If you are ready to sell your home, you do not need to wait for a specific season. Find a timeline that works well for you and make the jump. For buyers, being flexible and having your finances ready to go will make the process that much easier.
MYTH: A down-payment is the only upfront cost you will endure when purchasing a home.
TRUTH: The down payment is only one of the few upfront costs that buyers will need. Other upfront costs include closing costs, earnest money, inspection fees, and potential moving costs.
MYTH: Getting pre-approved for a loan doesn't need to be a priority when you are just preparing for a home search.
TRUTH: The current market is competitive and homes are moving fast. Having a pre-approval before beginning a home search will help speed up the process. Due to the high competition, many sellers will only accept offers accompanied by a preapproval letter. When searching for a home, having a pre-approval letter in hand will only increase your chances of purchasing a home that is a good fit for you.