Finally ready to make the transition into home ownership? That's awesome, and in this exciting time you might be turning to friends and family for an insight into the process. However, there seems to be a circulation of misinformation spreading around, so we're here to clear up a few myths.
You know the saying, "Don't put the cart before the horse," well that's important to remember when it comes to buying a home. You don't want to start looking for a house until you have been able to sit down with a lender and discuss what the bank will qualify you for. If you fall in love with a house that's $450,000 and come to find out you're only qualified for $400,000, you can get your hopes crushed and waste a lot of time. Don't start the process on the wrong foot and make sure the numbers line up.
For starts, when buying a home, 99% of the time the buyer's agent is paid by the seller. That random 1% can be for odd circumstances. So you're getting to use the services of a real estate agent for free. Having a real estate agent on your side means you'll get to see homes that aren't as readily available on public searches, you avoid outdated listings and scammers (there are a lot of them!), and you have protection when it comes to navigating the legalities of contracts and buying a home. Why wouldn't you want an awesome negotiator working to ensure you get the best from the transaction? For FREE!
Fortunately for some, this is a myth. Lenders can work with credit scores down to the low to mid 500's. Get in touch with an agent to help you connect with the right lender who can help you get approved. However, if your credit score is low, you will be doing yourself a favor if you connect with a credit repair specialist to at least get those numbers in the 600's. A better score will lower your interest rate. There are a lot of factors that go into approvals, but your credit doesn't have to be a sore thumb during the process.
Think you have to sell an arm and a leg to buy a home? Not at all! An FHA loan only requires 3.5% down. And there are conventional loans that only require 3% down. There are a lot of programs that can potentially help you with down payment assistance or be 0% down mortgage. USDA and VA loans are the most popular 0% down programs. If you qualify, this can take a big chunk off the amount of cash you have to bring to the closing table.
This is one of the biggest misconceptions. There are a lot of costs when buying a home, and that includes upfront costs. A few of those costs are termite, appraisal, and general inspection reports. If you are getting a mortgage, the home will have to appraise at value. And some banks might require a letter stating there are no termites in the home. Termite reports can range between $75-$100 dollars. An appraisal report can range from $300-$700 dollars. You will also want to have a general home inspection report prepared. This cost is usually around $400-$600, but depends on the inspector you hire, and the size of the home. You will also have to pay for closing costs. Closing costs are are not the same thing as the down payment and can range anywhere between 3-6% of the purchase price. In certain markets, this can be negotiated for sellers to cover by rolling into the offer price, but whether that decision is smart to do or not, will need to be discussed with your agent.
Now that you have some knowledge to get the process started, get in touch with Katie so that she can help you get through the process as smoothly as possible.