As exciting as buying a home is, it can also be confusing if you believe some of the many myths about the process. The housing market is in a continual state of change. Technology provides the ability to establish contact with a real estate broker and look at homes online, which is a significant help to people relocating to another state. Don’t let the following home-buying misconceptions interfere with finding the house you want for your family.
Myth – Save Money By Not Hiring A Real Estate Agent
If you choose not to hire a real estate agent, your home purchase can cost you additional money in fees, unexpected repairs, and more. The commission the agent receives is paid by the seller and built into the home’s price. Without a real estate agent’s expertise, you won’t have the negotiating power that comes with knowledge of the market and the use of comparables. Contracts can be confusing if you don’t understand all the terminology, opt-out clauses, inspections, appraisals, and other conditions that if not met can cancel the sale and still allow the seller to keep your deposit.
In most transactions, you don’t have to pay a buyer’s agent and they will get paid a portion of the listing agent’s commission.
Myth – Save Money By Using The Listing Agent
A single-agent transaction provides no representation for the buyer during negotiations. The listing agent has a responsibility to the seller and will try to get the highest price possible because his or her commission is based on the amount of the sale. Buyers do not get a better deal because there is a conflict of interest. It’s impossible for a fiduciary duty to be fulfilled for both seller and buyer in a single-agent sale. You should hire a buyer’s agent who will negotiate on your behalf and help you get the best deal possible.
Myth – The Mortgage Payment Is The Only Important Amount
There are more expenses involved in owning a home beyond the monthly payment. Although most mortgage payments include the current property tax in the total, not all do. In addition to the taxes, you must consider closing costs, homeowner’s insurance, homeowner association fees (if applicable), maintenance, snow removal (if applicable), yard care, and additional expenses not incurred when renting. If your new home will be further from your job, you will have increased fuel costs. Will you need to repaint, purchase appliances, replace the heating and cooling system, or do any major repairs? Be sure to factor everything into your home-buying budget.
Myth – You Need A Large Down Payment To Purchase A Home
A large down payment will reduce the size of your monthly payment, but it isn’t necessary to buy a home. A number of programs, including Federal Housing Administration (FHA) insured loans make buying a home possible for many more people. Many conventional lenders now accept smaller down payments from buyers with good credit. In 2016, the average down payment for first-time buyers was six-percent. Shop around and look for the best deal you can find.
Myth – You Start Earning On Your Home Investment The Day You Move In
The first thing you do is start building equity. Each mortgage payment reduces the debt you owe and increases your equity in your home. At first the numbers are small. If home prices increase in your neighborhood, you will benefit. It’s important to note, however, that the housing market can go down as easily as go up and you can find your home’s value to be less than you owe. Make your payments on time and build equity, but don’t count on making a lot of extra money on your home.
Buying a new home is a wonderful experience. The market is healthy, and more homes are being listed every day. Be sure you don’t believe in real estate myths that can cause you to make an expensive mistake.