5 Common Homebuying Myths
Taking the leap from being a renter into homeownership requires some important steps but it may not be as out of reach or difficult as you think. Having ample cash on hand and a good credit score are essential but there are many myths to clear up about what you absolutely need for the process. Here is some helpful insight to set the record straight.
Homeownership means debt
Some people assume that taking on a mortgage means you will be incurring a lot of debt. While needing to pay your mortgage every month is true, homeownership also comes with some big advantages. As you make your mortgage payment every month you essentially will begin to build equity. This can function similarly to a savings account in some ways. You can potentially pull out equity down the road and use it towards other things, or cash out when you sell. Owning a home and building equity is often a factor in one’s retirement plans.
Credit must be perfect
It is true that the better your credit score, the easier it will be to secure a lower interest loan but there are mortgage programs that have lower credit and income requirements that you can take advantage of making a purchase possible. It is worth stating that once you get a home loan this can also help you improve your credit ranking overtime as well.
20% Down is required
A lot of people believe this because if you put down less than 20% then you will have to pay private mortgage insurance or “PMI” in addition to your regular payment. It is common practice that people do this and put as little as 5% down on some properties and just have to pay a small monthly fee until their home has gained value to have more than 20% equity in it. These days that can be in just a few short years and it is a small price to pay for being able to own a home sooner than later.
Now is not the time to buy
If it is a favorable buyer’s market with rates that are very low like they are nowadays, then it can be a great time to buy property. If you are financially ready to make the purchase and if it is time to upgrade your home then this will play an important role in your timing as well. Nobody has a crystal ball to know what is going to happen tomorrow or later this year, but if you are well prepared now then it is the right time to make your move.
It will be more difficult to relocate
Some people think they don’t want to purchase as they will be stuck in that home. First, it is most often suggested to view a real estate purchase as at least a 3 year investment. This can help you weather through any market shifts while you get a sense of your new space. If the market remains strong, you can potentially sell sooner than that or you can always contemplate renting out the home if necessary.