Buying your first home is no easy task, and if you are shopping for the first time, you are likely to hear a lot of advice. While your friends and family may have good intentions, don't believe everything you hear. There are so many common home buying myths out there. In order to make the right decision, it is important to separate fact from fiction — especially when shopping in a hot seller's market. To help you along the way, we have debunked some of the most common homebuying myths:
Myth: You Need To Waive The Inspection Contingency To Be Competitive.
Over the last year, there was an increase in homebuyers waiving home inspection in order to make their offer stand out. While this is a good way to sweeten an offer in a hot market, it is a risky proposition for first-time buyers. Despite this recent trend, a home inspection contingency is still the standard. It is not an unreasonable or uncommon request. As the market continues to calm down, waiving the home inspection contingency won't always be necessary to land a home.
Myth: You Should Avoid Putting Down Less Than 20%.
Many first-time shoppers are waiting until they have saved 20% for a down payment before making a purchase; however, this is not always necessary. So long as you have a stable source of income and good credit, you can get by with putting down less than 20%. You may be required to pay Private Mortgage Insurance (PMI), which could cost you more in the long run; however, buying earlier with a smaller down payment helps you to begin building equity sooner.
Myth: A 30-year Mortgage Is The Best Deal.
Most buyers spring for a 30-year mortgage over a 15-year mortgage because it offers the lowest monthly payments. However, with a 30-year mortgage, you will pay significantly more in interest over the life of the loan. By borrowing for a shorter period of time, you stand to potentially save hundreds or thousands of dollars in interest
Myth You Won't Be Approved For A Mortgage If You Have Student Loan Debt.
While it is true lenders look at your debt-to-income ratio when evaluating your creditworthiness, they only focus on monthly payments in comparison to your monthly income. This means even if you have tens of thousands of dollars in student loan debt, you can still be approved if your minimum monthly payments are low enough.
Myth: You Have To Overpay To Land A Home.
There was some unprecedented activity in the real estate market in 2021, which sent home prices soaring. The national median home price increased 18% year over year. As a result, many buyers were forced to enter bidding wars that led to sale prices of $10K to $15K over asking price. However, the market has cooled down a bit over the last couple of months, and we expect that trend to continue into 2022. There should be an increase in inventory along with an increase in interest rates. This combination should help even out the buyer/seller balance. While home prices will likely continue to increase next year, we don't expect to see the double-digit percentage growth we saw in 2021.
While it is always good to hear different perspectives on the real estate market, many of the myths floating around today have little to no merit. The best thing you can do is trust your real estate agent to guide you through the process. Let's connect so that you can be empowered with the right homebuying knowledge to pursue and purchase the home of your dreams!