If you are considering buying your first home, you’ve probably spent some time on Google, talked to other people asking for advice and are in information overload! How can you tell if the advice is good…or just a myth? It seems like everyone you meet has a story about buying their first property or an opinion about what type of real estate that you should buy. There is just as much bad advice – if not more – out there as there is good advice, but it can be difficult to navigate the fact from fiction to make your own informed decision.
Owning a home means you can build equity, take certain tax deductions, and so much more. But for some people there are financial, economic, or personal limitations that are preventing them from buying a home right now – or at least they think! Let’s dive deeper into some of the common myths out there:
I don’t have enough for a down payment. Most people who think they don’t have enough money saved for a down payment don’t really know how much money they actually need. Your first step should be contacting a lender to determine what your goals are, what you can afford, and what you need to do to buy a home. You may not have to put down as much money as you think, but you won’t know unless you reach out to a lender. So much depends on the type of loan and the value of the home.
I need to build up my savings first. Normally this is always good advice, however if home prices are rising that usually means that rents will as well which means you still won’t be able to save as much money as you’d like. That rent you are paying could have been putting equity into your home instead. Here’s a great blog on how to financially prepare for buying a home: CLICK HERE.
I’m locked into my lease. Yes, a lease is a binding agreement between you and your landlord, however many landlords are willing to work with renters when they are ready to buy a home vs. just break a lease to move into another rental. Talk to your landlord to see if there is a penalty for breaking your lease and how much notice they would require. Some landlords won’t charge a fee if they can find a new tenant asap, others may charge you one month’s rent for the inconvenience which in the grand scheme isn’t very much money considering what you could save by investing in your own home and gaining equity. It never hurts to ask!
I might move away. This is a valid reason for not buying a home if you haven’t found your forever town or city. However if you’ve been saying this for years, it’s most likely an excuse and not investing in property could mean you are leaving money on the table. You could be paying just as much in rent as you would for a mortgage payment. Even if you do decide to move, you could have gained enough equity in the home or the market has taken a good swing that you could make money if you sell or you could always rent it out.
I’m waiting for the market to change. This is a common one because people always want to buy low and be able to sell high down the road. Markets are cyclical and you should try to buy when there are more sellers than buyers – when there is high supply and low demand you can get a better deal. However no one can really predict the market and the perfect time to buy. Many people will never manage to out save market appreciation and can lose purchasing power if interest rates trend upward.
You need perfect credit. While you credit score does play a huge role in obtaining a mortgage, that doesn’t mean you need perfect credit. The reality is that while a higher credit score generally means you’ll have a more favorable interest rate, it doesn’t mean that poor credit automatically disqualifies you. There are many options available for buyers of all incomes and credit tiers, but you’ll need to talk to a lender to discuss your options.
Finding the perfect house. Of course everyone wants to find their perfect house, after all it’s the whole point of buying a house, right? But when you have viewed hundreds of homes and still can’t find anything you like; your expectations may need to be adjusted. Your requirements may be too specific and can only be found in a custom-built home. If you are looking for the perfect house, you will never find it, because a perfect house doesn’t exist. If the home checks 80-90% of your boxes, it’s worth considering.
I’m a millennial and I can’t afford to buy a house. It seems when it comes to millennials especially there is a myth that they are just not buying homes anymore because they don’t think it’s a good investment, prefer renting or living at home, or a variety of other reasons. In fact, most millennials would love to purchase homes, however they are often told they shouldn’t or can’t afford one if they have student loans. However it could be a much better investment for them instead of renting, especially considering the tax breaks they may be able to take advantage of.
You should never buy a home because someone else thinks it’s a good idea. But if you’ve convinced yourself that it’s not in the cards because of any of the reasons above, then it might be a good time to talk to a lender to discuss your options. As always, we’re here to help. Give us a call or stop into any of our convenient locations and we’ll be happy to discuss your home buying options!
Vice President, Senior Mortgage Lender
NMLS MLO ID: 532621