Buying a home is probably the most expensive investment you make in your lifetime. A word of advice ... make sure to do your research before jumping in. The right information will prove invaluable when obtaining financing, searching for a house, and closing the deal. On the other hand, remember not all the information you may hear is reliable.
Know the difference between fact and fiction. Listening to the wrong sources can cause you to make poor buying decisions. To avoid these mishaps, contact our team for expert advice when you're ready to invest in a home. Here are a few of the "myths" we most commonly hear:
- 30-Year Mortgages are the Best
Numerous people believe that 30-year mortgages are better than their 15-year alternatives. This is a common myth which can result in unnecessary financial losses. The popularity of the 30-year plans can be attributed to the fact that the monthly payments will be lower than for the 15-year loan. However, the longer payment period means that you will be in debt longer, and the interest will keep increasing. Therefore, if you can manage higher mortgage payments, the 15-year mortgage may be more beneficial in the long run.
- 20 Percent Down Payment is Essential
Potential homeowners are intimidated by the prospect of buying a home because of a 20 percent down payment. However, you should know that the 20 percent payment is not mandatory. In general, putting down the 20 percent is favorable because the higher down payment translates into lower interest and monthly payment costs. If you do not have the resources to do this, you can choose a financing plan which does not necessitate the expense. There are programs in place from the government and banks, especially for first home buyers, which ensure a low down payment.
- Down Payment is Your Only Upfront Expense
Some people believe if you have saved sufficient funds for a down payment, you are ready to go. This is a costly myth and can put you in financial trouble. There are multiple other costs which you must account for before you become the owner of property. You might be required to pay for the closing costs. You will also need to have the home inspected and appraised which translates into more expenses. There are also charges attached to credit, reports, insurance and contract review experts. Therefore, you should ensure that you have enough funds to cover the costs.
- Perfect Credit is Mandatory
Perfect credit score is not indispensable if you want to purchase a home. Therefore, you should not be stressed with regard to this matter. In general, a credit score of 700 points or higher is favorable for you because you will obtain a loan with lower interest rates. However, most lenders will lend to customers with lower credit score. In fact, most financial institutions will not only consider the score, they will evaluate other factors such as your history with the specific lender and your total debts and savings.
Finally, you should remember that a good REALTOR® is important. The real estate expert will help you navigate the home buying process with ease and speed. If you are looking for an experienced realtor in South King County, contact SheriGoldman.com for more information.