Purchasing a home can be a time consuming and confusing process. With all the steps involved in the process, there are many myths that have been created, which could sway potential buyers away from wanting to buy a home. In reality, many of these myths are incorrect. There are several common myths in particular, which many people believe that are actually inaccurate.
You Need a Big Down Payment
The first myth about buying a home is that you need a down payment equal to at least twenty percent of the purchase price. While most mortgage lenders would prefer that you have a big down payment, this is not an option for many home buyers. Fortunately, there are many loan programs available, which can provide you with a down payment for far less. One option would include taking out a FHA mortgage, which only requires a down payment of 3.5%.
You Need Excellent Credit to Buy
Most potential buyers also believe that excellent credit is needed to qualify for a mortgage. While mortgage lenders want a borrower to have at least a decent credit score, those who have scores of 680 or better can normally qualify for competitive interest rates.
You Should Avoid Using Realtors
Many home buyers and sellers try to cut costs by avoiding realtors, which can end up taking a total of six percent of the sales prices as a commission. While the commission may be avoided, those who enter into a transaction without a realtor are missing out on a lot of services, which could help to save some money. Some services include completing market research to determine a fair selling price, negotiating on behalf of the part they represent, and handling some of the legal work. All of these services are valuable, which could lead to significant cost savings.
Fixed Rate Mortgages are the Only Option
A common thought among many buyers is that fixed rate mortgages are the best loan options. Fixed rate mortgages can be beneficial as they will provide a buyer with the surety that their loan payment will not increase in the future. However, buyers do pay a premium for that protection as 30-year fixed rate mortgages are often 1% higher or greater than adjustable rate mortgages. If you plan on selling the home in the next five to seven years, then a variable rate mortgage could be a better option.