As with all things in life, there are myths out there regarding buying a home. Let’s look at some of these buying myths.
You need a large down payment
Most buyers assume they need at 20% down as this is what’s in the news. Stories focus on how unaffordable home buying has become, particularly here in California. Certainly California is an expensive place to live. But it is at least as expensive for a renter, and rents go up while fixed rate mortgages stay the same for 30 years. As for the down-payment, it can be 10%, 5%, 3.5%, 3%, and there are even no down payment loans for everyday people. That is to say, you don’t need to belong to a particular group to qualify.
You must have terrific credit
While great credit will translate into a more favorable interest rate, there are programs below 740 credit scores. In fact, there are programs all the way down to 500 credit score. Each step of the way down will add its requirement. Still, I have had no problem getting people a lender who will work with them. Even if they have had a bankruptcy, a foreclosure or a short sale in their past.
The best deals are off the market
Occasionally, a friend will crow about how their mother’s aging neighbor sold their home to your friend for a song. You seldom hear about all the issues that were discovered after the private sale was concluded. And how much they cost your friend. The best deals are the ones where you know exactly what you are buying into because your realtor has negotiated a decent price for you.
You have to watch your back
People who think they can go through the purchase process alone firmly believe they have to watch their own back. They do not understand that a realtor is required by law to look after the client’s best interests. This is known as fiduciary duty. It is owed to each and every client. Further, a realtor will arrange for a professional home inspection to identify the issues. Once the issues are known, the realtor will work with you to create a list of requested repairs. The seller then has to decide how much they like your offer, given all the repairs you are requesting. Further negotiation may be needed and that’s what your realtor is for.
Once you make an offer, you’re committed
Last but not least, after your offer has been accepted you have 17 days to make sure the home is really what you expect. If repairs are requested, they can be the reason to back out of the contract. Usually, though, appropriate repairs can be secured. However, if you find some other reason, such as crime in the area or quality of schools or some other reason, you can back out within 17 days and get your entire deposit back. Even after 17 days, you can back out if you are willing to forfeit 3% of the agreed upon purchase price to the seller. As this is not the best outcome, use the 17 days wisely.
No doubt there are many other buying myths out there and I’d love to address them if you care to leave me a comment outlining what you’ve heard. Or you can simply get in touch (760 622 5087 or [email protected]) and I will tell you the truth of the buying myth, while adding it to a list for a future article.