Deciding to buy a home can be a stressful enough process as it is. The last thing you need to do is worry about things that you’ve heard about home buying that simply aren’t true. There are a number of home buying myths out there that can actually make the process more stressful. The following are a few of the more common home buying myths that you should be aware of:
1. Renting is More Affordable than Buying
Consider this: rent will increase every year and you’ll never get anything in return, whereas buying a home is an actual investment. Not only can you get a fixed-payment mortgage, which means your monthly payments will never change, you’ll actually become the owner of the property after your payments are up. There are also a number of tax advantages to owning a home that you can take advantage of as well.
2. A Fixer-Upper is More Affordable than a New House
The initial cost of a fixer-upper is probably more affordable than buying a newly built home. There are always hidden problems in older homes that may not be uncovered until you are in the midst of a remodel. Remember, older homes often require new plumbing, wiring, and more as well, all of which can be quite expensive. Not to mention potential issues that older homes have, such as lead paint, asbestos, and more. You should also remember that you’ll never recoup 100 percent of your remodeling investments even if they do increase the value of your home.
3. A Home in the Suburbs is a Better Investment
Land in the suburbs tends to be cheaper than in the city, which means that there are more lower-cost homes available in the suburbs. However, don’t let this fool you into thinking that a home in the suburbs is more affordable. Depending on how far you live from your job and from amenities such as banks, grocery stores, gas stations, and more, transportation costs can end up costing you a fortune.
4. You Need to Make a Large Down Payment
A 20 percent down payment is usually the largest down payment you can make, but it’s not necessarily the only option. While it’s usually the best option, since the larger your down payment is, the less your monthly mortgage payments tend to be, you can make a smaller down payment depending on a number of factors. Good credit and low debt to income ratios can help. You may also qualify for VA and FHA programs, which only require down payments as low as 0 to 3.5 percent.
5. The Down Payment is the Only Upfront Cost You Have to Worry About
Don’t begin looking for new homes with the misconception that the only upfront cost is the down payment. You will have to pay closing costs as well, which can account for 2 to 5 percent of the purchase price.
6. Mortgage Payments are the Only Future Payments You Have to Worry About
When figuring out if a home is affordable with your income, don’t just account for the mortgage payments. Keep in mind your cost of living, potential home repair costs, general maintenance costs, utility costs, and home insurance payments (just to name a few additional costs).
Understanding some of these more common home buying myths will not only make the home buying process less stressful, it could end up saving you money. For additional home buying advice, contact us at Carrington Real Estate today.