3 Big Myths About Buying Your First Home

March 28, 2017

3 Big Myths About Buying Your First Home

For many first-time homebuyers, the idea of buying a first home can seem daunting. You may think that you need a sparkling, near-perfect credit score to get a mortgage, and that you need to have saved for years for a big enough down payment. And, of course, there are concerns that it will be hard to find a realtor who can keep your house buying costs under control.

The reality, though, is that buying your first home is easier than you might think. Here are just three of the myths that you should know about buying a new home.

Myth #1: The average down payment on a house is too high for most people to afford

Most people assume that the average down payment on a house is 20% (or even higher). While that has become a standard benchmark in the industry, it also ignores the fact that there are a lot of special programs for first-time homebuyers where the down payment is as low as 3%. In many cases, you may end up only needing a down payment of 10%.

In general, people tend to overestimate the amount of money needed as a down payment. In one Fannie Mae survey, in fact, 76% of Americans either didn’t know or were misinformed about the size of an average down payment.

Myth #2: If you don’t have perfect credit, you can’t buy a new home

Another misconception is that only potential homebuyers with a perfect FICO credit score of 780 or higher can ever get a mortgage. As a result, they may put off the process of buying a new home for years.

While it’s helpful to have as high a credit score as possible (it will help you get a better rate), some homeowners can qualify with a FICO score of as low as 580. And the reality is that many first-time homebuyers have less-than-stellar credit. Again, the data supports this point. In one study of approved mortgages, it turns out that approximately one-half (54.7%) of borrowers had a credit score in the range of 600-749.

Myth #3: Finding the right realtor is extremely difficult

The third misconception is that finding a realtor – especially if you’re not buying a $1 million home - can be a difficult and time-consuming process. Maybe this is a result of too many reality TV shows about buying new property, but it is a lot easier than you think to find a realtor who can help, even if you’re on a modest budget.

One key to look for is a realtor who is passionate about finding you the best deal. Another key is that a realtor should have the types of analytical tools – like a mortgage calculator – that can be specifically tailored to your unique needs.

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While house buying costs can really add up, with a little research, a little saving and a little investigation into special mortgage programs for first-time homebuyers, you’ll find that many of the myths about buying your first home are just that – myths. A passionate, savvy and talented realtor can help you navigate the real estate market and find the home of your dreams.

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