If you are looking at purchasing a new home, you probably have an idea of how the process works and what you need to succeed. Today I want to talk to you about the seven misconceptions that buyers have about the real estate process.
- You need to have a 20% down payment. There are plenty of people who purchase homes with much less than 20% down. In fact, some programs even allow you to forgo a down payment altogether. To determine which program best suits your needs, I highly recommend getting in touch with a lender.
- You have to have a 640 credit score. While most programs will require you to have a score above 640 to qualify, this is not always the case. Don’t just assume that you can’t buy a home if you have a lower credit score.
- Purchasing without a Realtor will save money. Commission has already been pre-negotiated with the seller, and the seller actually pays for both the listing and buying agent’s commissions.
The price of the property is really a market value and the seller is willing to pay a portion of that value in order for them to sell their house. Since the seller is still going to try and sell it at market value, this means that not having a Realtor won’t save you money.
- Renovation homes offer good deals. Many buyers ask me about home flipping after seeing it done on television. While flipping works on HGTV, it’s important to realize that people on these shows enjoy discounted rates for important services and have a whole team working with them.
If you’re only capable of taking on basic home projects, I would not recommend buying a home that will require major renovations. Instead, I recommend buying a property that already meets your needs, with perhaps the exception of minor cosmetic details. You can always take on more advanced projects in the future.
- Not doing inspections on a new home will save money. I highly discourage skipping inspections when buying in a new community. Inspections are critical to the buying process, and home purchases are expensive. You don’t want to spend such a significant amount without knowing the property is in good condition. Just because it is newly built does not mean that mistakes weren’t made.
- Prices aren’t negotiable. The prices that are on the MLS, Zillow, Trulia, etc. are always negotiable. In fact, depending on the seller’s motivation, you may be able to get a great deal.
If a seller would like to close quickly and you’re willing to accommodate that, for example, they may be willing to give a bigger concession on the price of the home.
- You shouldn’t shop around with mortgage lenders. When you check with a lender to find out if you are qualified, take your time and shop around. Different lenders are going to offer different products with different rates. You may even mesh better with one lender versus another. When it comes to working with money, you want to be comfortable with the professionals involved.
Some people avoid shopping around for lenders because they’re afraid of negatively impacting their score by having it pulled multiple times. But the truth is that when they pull your credit with one lender, other lenders are allowed 30 days to do the same without negatively impacting your score.
I hope that this information is helpful to you. Please let me know if you have any further questions or comments about these seven misconceptions.
If you are interested in buying or selling your home, don’t hesitate to contact me. I look forward to speaking with you soon.