Buying your first home can be a confusing experience.
You’ll receive so much advice from family and friends, all of it well-meaning no doubt, that you’d be forgiven for hesitating about any decision.
Finding an agent who knows the local market, along with a great mortgage broker, is invaluable and can relieve much of the stress of buying a property.
Of course, there are always myths about buying and selling property. Let’s explore these so that you have a more accurate picture of the market.
You need a 20% downpayment
No, you don’t. You’ll find many lenders, such as Rocket and United Wholesale Lending, who’ll cut a much sharper deal for you. It’s a great idea to save as much as possible for a downpayment, but the 20% hurdle doesn’t exist. Make sure you know all the terms and conditions of a loan before committing to it.
Pre-approval locks in mortgage rate
No, it doesn’t. Your final rate will be subject to market conditions when you sign your contract. With rates steadying and speculation they might fall in the next six months, this could be an upside for you.
Wait for prices to fall
Timing the market is a fool’s errand. Buy when you are ready, and shut out all the noise about price and interest rate fluctuations. Focus on your own circumstances, including whether your rent is likely to rise.
Buying is a better investment than renting
Maybe. It depends how much money you have to invest elsewhere, and what you intend to invest in. However, rent money is “dead money” and real estate has a track record of strong growth over time.
You must find a home first to get a loan
Yes and no. To be clear, getting a pre-approved loan is the smart play. It means any offer you make to a seller can be backed by a lender. Pre-approval also means you know what you can afford. However, once you find a home, your lender will value it to ensure you’re not paying too much for it with their money.
You’re committed to the lender who pre-approves you
Definitely not. You can switch horses in this race at any time before signing bank documents.
Fixer-uppers are cheaper
Don’t take this one to the bank. Be very careful if you’re considering buying a rundown residence. Unless you know what you’re doing, you could set yourself up for a world of pain. Conversely, poorly presented properties can be good buying.
Only buy in spring and summer
Let’s bust this myth. You’ll find great properties and deals at any time of the year. Most buyers are active in the warmer months, but this can push prices higher. If you can see past the snow, rain and clouds, you may justl find the first home of your dreams.