Top 3 Real Estate Myths Dispelled | First Option Mortgage
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April 23, 2018

Real Estate MythsWhether you want to hear it or not, you will undoubtedly receive a lot of advice when you start looking for a home. Friends, blogs, and the real estate books at Barnes and Noble all offer maxims and best practices for potential homebuyers, always claiming to have the secret to a successful home purchase. Sometimes the advice is good; sometimes it’s harmless; but every now and then it has no basis in reality, even if it sounds great or logical. To help you avoid house-hunting woes, we’ve assembled the top three real estate myths and dispelled them.

1. Myth 1: The Bigger the Down Payment, the Better

You hear this all the time, usually supported with basic logic: The more you pay now, the less you’ll have to pay off over time. Though it’s true, the more your able to put down, the lower the monthly payments. And if you can put down 20% or more,  you won’t have to buy mortgage insurance, but those costs can be negligible when you consider other factors.

  1. Immediacy. It can take years to save 20% for a down payment, during which time market prices can rise sharply. If you find your ideal home at a good price, it’s safer to buy it immediately than to wait and scrounge together 20% of its cost—a figure which could grow as you’re trying to save. 
  2. Flexibility. In the event of a job loss or natural disaster, having invested a lower percentage of a home’s worth can work in your favor. With more of your savings still intact, you’ll have money to continue making payments or repairs as needed. And if you need to sell suddenly, even at a loss, you won’t lose as much if you didn’t invest all of your savings at the start.
  3. Sensibility. No one knows how much a home will truly cost them until they’re in it. With repairs, annual maintenance costs, and property insurance, you pay more than just mortgage to own a home, and those additional charges can surprise anyone. Especially if you’re a first-time homeowner, it’s wiser to retain as much capital as you can to gain a sense of how much your home will cost. If after a couple of years you feel comfortable with your budget and want to pay off your mortgage sooner, you can always contribute that 20% down the road. Until then, going with the minimum down payment is usually wiser.

2. Myth 2: You Have to Start with a Low Offer

Start low, the saying goes, and it’s true if you’re buying records at a flea market, but the housing market is smarter than that. Sellers know that an overpriced home lingering on the market is dangerous; they generally know what’s competitive and price their homes accordingly. It isn’t uncommon for homes to receive multiple offers at once, often above the asking price. Make sure you know your market before you make an offer. If you always go low, there’s a good chance others will always swoop in and buy the house right out from under you.

3. Myth 3: You Always Save in the Suburbs

On paper, the farther you go outside the city, the more bang you’ll get for your buck. In terms of square footage and yard space, this might be true. Factor in commuting expenses and the mental toll of spending hours every day in your car, though, and those suburb homes sound like less of a steal. Gas and car maintenance costs rise by the thousands, every year, by moving even ten miles outside a city. Spending an extra two hours away from family is a subjective but incalculable expense. Suburbs offer many more benefits than cheaper homes, so they might still be the best option for you. Just be sure you consider every factor when looking to buy outside the city.

If you’re planning to purchaserefinance, or learn more about mortgage rates, simply fill out our Fast Response form or give us a call at 888-644-1999.  Our experienced mortgage professionals would love to sit down and discuss your needs. We look forward to hearing from you!

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