For most, buying a home is one of the biggest life decisions and whether you are a first-time or an experienced homebuyer, it can be a daunting and overwhelming task. To help ease some of those concerns and dispel common misunderstandings around the process, we are myth-busting five popular misconceptions about buying a house.
1. NOT USING A REAL ESTATE AGENT CAN HELP YOU SAVE MONEY
When buying a home, the knowledge, experience and savvy of a realtor is an invaluable resource that buyers should absolutely take advantage of. Real estate contracts are not simple documents and agents are experts in the field, trained to read, digest and explain to their clients what they are signing – from the home value to inspections and more, which ultimately protect you. Many also believe you will have to pay commission to the agent at the end of the process. While agents do get a percentage of the purchase price, this is paid by the seller and an agent can even help negotiate the lowest possible purchase price using comparables in the neighborhood and their overall expertise. In the end, using a real estate agent helps you save in more ways than one, rather than the other way around.
2. A FIXER UPPER IS THE CHEAPER OPTION
Don’t be fooled by the shiny HGTV shows that say you can renovate an entire house for a seemingly impossibly low price. It seems impossible because it often times is. While many see potential in a fixer upper to build their dream home, moving walls, replacing kitchens, bathrooms, electrical and plumbing, and building additions take far longer and are much more expensive than it appears on TV. Be sure to buy a home that you love the way it is. If you have an itch to renovate, stick to cosmetic upgrades like paint, flooring or new appliances to make it your own.
3. SKIP THE HOME INSPECTION IF THE HOME IS NEW
When buying a home, you are blind to the history of its construction, what contractor worked on it, if they cut corners and what you’ll find in the ceiling, behind the walls or in the foundation. Even if the house is brand new, you should always insist on an inspection. In the long run, the few hundred dollars for the inspection will be worth it, especially if you uncover thousands of dollars’ worth of repairs prior to closing rather than after.
4. BUY A HOME FOR THE MAXIMUM PRICE YOU ARE QUALIFIED FOR
If a bank approves a loan for up to $1 million, this does not mean you have to buy a home for $1 million. Lenders base the maximum loan amount on your debt-to-income ratio, which does not factor in certain expenses like those incurred by children, entertainment and eating out, or anything you spend your disposable income on like clothes, furniture or travel. A loan of $1 million may therefore show on paper that you can afford a payment, but when all of the above expenses are factored in, that payment becomes unmanageable. When considering what price range you can afford, consult an online home affordability calculator to determine what you can afford comfortably.
5. THE DOWN PAYMENT IS THE ONLY EXPENSE YOU NEED TO SAVE FOR
When getting a mortgage, there are many upfront costs to consider outside of the down payment. Before closing, you will often need a home appraisal which can cost around $500 and most lenders require at least two months of mortgage payments in addition to the down payment saved to approve the loan. Lenders likely will not approve the loan if you propose all of your savings are being used for the down payment; they need proof you will be able to pay the mortgage month after month.
With many moving parts and far more opportunities for missteps than those outlined above, it is wise to consult a professional, do your research and take your time when buying a home.
if you need guidance and expertise in navigating the Washington D.C. real estate market!