Buying a house is a big leap for most people. It’s a major milestone in life, and it comes with a whole slew of responsibilities that often makes you look like a ‘proper adult’. There’s a lot of work involved in buying a house, so it’s understandable that there’s also anxiety involved.
However, as prevalent house-buying is, there are a lot of persistent myths and rumors that surround it. People assuming a special situation is the standard process is common enough that they tell their friends about it; perpetuating common misconceptions. Lack of knowledge about government efforts to make homeownership easier is also a cause for these myths. These myths can prevent someone from owning a house even if they’re perfectly capable to do so, and that’s what we’re going to clear up today.
1. It’s NOT Always a Good Investment
You’ve probably heard financial leaders and influencers say that real estate is a great investment medium. While it can be, as the potential financial gain is definitely there, it’s not always the case. The factors deciding whether a property is profitable or not various a lot, and if you are considering getting into real estate for investment, it’s best to study what makes a property value and when the best time to buy is.
2. It IS Better to Use a Realtor
Sometimes, people think that they’ll save more money if they don’t use a realtor. However, realtors are crucial to the process that it’s simply a bad decision not to utilize one. Real estate contracts are rather complicated and difficult for average joes. A realtor can help you go over the necessary steps to protect yourself, without going through the hassle of having to read a lot of legal jargon.
3. It’s NOT Always 20% Down Payment
Many people simply assume that you need to pay a 20% down payment upfront when buying a home. They cannot be more mistaken; however, as even the down payment itself is subject to different kinds of factors. There are multiple loans that offer different agreements, such as an FHA loan that requires a 3.5% down payment, or even conventional loans that offer 3-5% down payments. Looking deeper at payment options should shed light on how much you should truly pay for down payments and mortgages.
4. DON’T Let the Market Decide for You
Another common misconception is that you have to buy at a certain time or season of the year. And if you ever picked up a financial magazine, it somehow always says that “don’t buy now”. So when should you buy it, really? You should buy it when you can, that’s it. Don’t let the market decide for you, as it will only spell despair. The market fluctuates so often that only those who are investing on large scale can benefit from its movements, and predicting it before the fact is next to impossible. Buying on your own terms, on your own time should be the way to go, not by some arbitrary market rates.
5. Buying IS NOT Always Better than Renting
Another commonly thrown advice is it’s better to pay for a mortgage than rent. This is rather misguided advice, however, as different circumstances in life are still the deciding factor whether renting an apartment or buying a house is best for you. If an apartment is the better choice at the moment, perhaps due to proximity to work, then renting makes more sense than buying. For long-term planning, however, especially deep into old age, buying your own house is definitely more beneficial.
6. A Cheap House You Can Renovate IS NOT Always a Good Idea
Okay, this one is definitely on a case-to-case basis as some houses are still worth saving. A fixer-upper house is one that’s largely intact, without any need to rebuild its foundations. If an inspector investigates and decides that the house is still in good condition with only cosmetic damages, then perhaps that’s a good choice for you. However, if even the foundations are damaged, you better think twice as repairing those might cost you the same amount as buying a new house.
7. You DON’T Have to Buy For the Maximum You’re Qualified For
So you’ve got your credit checked and found out that you can loan for up to at least half a million dollars. Should you then buy a half-million-dollar home? Not quite just yet. You have to think of other expenses included in the home buying process, so even if it looks on paper that you can buy it, you might end up coming short if you actually went ahead. You can use home affordability calculators to see whether you’ll be in the red or not when buying a home.