First-time homebuyer myths – Do you know what’s fact and what’s fiction when it comes to buying your first home? It can be
With so much information to sift through, it can be tough to distinguish fact from fiction, especially because the media world can over simplify the process. That’s why we’re revealing the truth behind some of the most common home buyer myths and misconceptions.
Buying a home is indeed a big decision, but it doesn’t have to be such a scary one. If you arm yourself with knowledge and a team of qualified support professionals, you’ll be able to make the right choices for you, your family, and your financial future.
What are the first-time homebuyer myths? We’ve identified 10 common myths.
First-Time Homebuyer Myths #1: You Need a 20% Down Payment
There are a lot of buyers that are purchasing homes with down payments that are less than 20% of the total cost of the property because of home costs and living expenses. In today’s market, you can buy a home with as little as 3-5% down.
There are multiple programs out there that allow you to have a lower down payment, and a lender or mortgage broker can talk you through which option is the best for you. Since you’re putting less money down, you’re a riskier borrower to your lender than people who put down a full 20%. Because of this, you will most likely need to pay mortgage insurance as part of your monthly payment.
First-Time Homebuyer Myths #2: Real Estate Agents Are Expensive
We are with you every step of the way throughout your home buying journey. Your Point B agent will invest numerous hours working on your behalf to help you have the best home buying experience. That does sound expensive doesn’t it? Luckily for you, buyers usually don’t pay a real estate agent’s commission. Your agent’s fee is paid for at closing by the seller of the home you’re buying. (1)
First-Time Homebuyer Myths #3: Don’t Call A Real Estate Agent Until You’re Ready To Buy
This is a big misconception. Bringing your agent in earlier will help you with the purchasing process. Even if you’re in the very early stages of looking, like browsing the Point B website or Zillow, a real estate professional can be a huge help.
A huge advantage to working with a real estate agent early on is that they can create a search for you in the Multiple Listing Service (MLS). This will enable you to get notifications for every house that meets your criteria as soon as it hits the market. The MLS is usually more up-to-date and more accurate than popular home search sites like Zillow and Trulia.
If you set up your search before you’re considering buying, you can get a true sense of what’s available in the area you desire. Reviewing the MLS and speaking with an agent as soon as possible can help you set realistic expectations for when you actually start the house hunting process. It will be hard to not spend all day looking at homes in the MLS once you begin the process because house hunting can be really fun.
First-Time Homebuyer Myths #4: Fixer-Uppers Are More Budget Friendly
Who hasn’t watched the fixer uppers shows on HGTV? These shows can really glamorize houses that need TLC and also make purchasing one seem like a smart financial investment. But, this isn’t always the case.
Often times, homes that need a lot of work also require a lot of money. Plans for big renovations, like additions, a total kitchen remodel, a new deck or installing a pool, take a lot more time than people think.
If you’re interested in a fixer-upper, ask your Point B agent to show you a mix of newer homes and older homes. If you fall in love with an older home that needs a lot of work, get some quotes from contractors before you buy so you know the real cost of the renovations especially here on the Island. This can give you a clear understanding of how possible the renovations are, and if they can be worked into your budget. Not knowing what’s in store can leave you living in house that is not what you expected.
First-Time Homebuyer Myths #5: Your Only Upfront Cost Is Your Down Payment
Your down payment is big, but it isn’t the only money you’ll spend during the home buying process. At closing, you’ll pay your down payment, but you’ll also bring closing costs to the table. Closing costs are typically anywhere from 2-4% of the total purchase price of the home. (2) This amount includes the cost for items like homeowners insurance, title fees, and more.
In addition to those costs, as the buyer, you will also need to pay for an inspection before closing. This cost will vary and depends on the size of your new property. Also, note that home inspectors on the Island are in high demand.
The home will also require an appraisal for the lender you’re working with. The appraiser will come and inspect the home to determine how much it’s worth. Depending on your lender’s requirements, you may need to pay for the appraisals at the time it happens or have it rolled into closing costs. The appraisal will also vary in price depending on the property.
First-Time Homebuyer Myths #6: You Need A High Credit Score
You don’t need perfect credit to buy your first home. There are loans out there that buyers with lower credit scores can qualify for. These are good options for people who have had credit issues in the past, but some of them come with additional fees you will need to pay. Speak to a few local lenders or mortgage brokers to talk through which options might be best for you.
First-Time Homebuyer Myths #7: You Can’t Qualify For A Mortgage If You’re Still Paying Off Student Loans
Some buyers may feel better about paying off their existing debts before venturing into homeownership, but it’s not a requirement. When you are applying for a mortgage, the lender you’re working with will assess your debt-to-income ratio. (3) If your income is high enough to allow you to make all of your expenses and incur a mortgage payment, each month, having a student loan will most likely not prevent you from getting a mortgage.
First-Time Homebuyer Myths #8: You Should Base Your Budget On What Your Lender Approves
How much house you qualify for and how much you can afford are two totally different numbers. When you prequalify for a mortgage, your lender will look at your income, debt, assets, credit score, and financial history to determine how much money you might qualify for. (4) For some people, this number might be much higher than you thought because lenders tend to approve for the highest amount they think you can afford. But that doesn’t mean that’s how much you should borrow.
Instead, figure out how much house you can actually afford. An online mortgage calculator can be a good first step in determining this number. We recommend thinking about what you want your monthly payment to be as a starting point. And remember to include your principal, interest, taxes, and, insurance. You should also think about ownership expenses that aren’t part of your monthly payment, like HOA dues and maintenance.
First-Time Homebuyer Myths #9: It’s All About Location
We have all heard the phrase location, location, location! However, here’s the thing, it’s not always the case. When considering town preferences, school districts, and commute times (which are relatively short on the Island), location is important to consider. When buying a home, you also need to think about
If you are looking at a
Whatever your criteria for your new home is, you may want to choose an area in one of the towns with great resale potential, and this is something that we at Point B can speak to you about. We are experts on the Island and are constantly monitoring buying and selling trends.
First-Time Homebuyer Myths #10: If You Look Hard Enough, You’ll Find A Home That Checks Every Box On Your Wishlist
Once again, TV can really make finding a home very romantic. However, especially here on Martha’s Vineyard, where the housing market is challenging, it might be really hard to find a home that has everything you’re looking for. However, owning a home here is very special, and you will definitely make it your own.
Creating a wishlist that has everything you want can be a great starting point for figuring out what you can and cannot have, but it can be good to narrow that wishlist down to the top five things that are important to you in order of priority. It’s also important to know what your deal breakers are. For example, we had a client who did not want to live by a cemetery. We had a property that was new
Having your list is great to bring to the table when you first start talking to one of our agents. We will be able to look at your list and search for properties that might work for you.
By meeting with us early in the process, and knowing what to expect, breaking through the myths, you’ll be able to start the process off prepared and will find your home sooner rather than alter
Point B Realty Is Here To Help
Whether you’re a first-time buyer, a seasoned homeowner, or buying your second home, we are here to advocate for you. We’re here to answer your questions and do the hard work for you, so you can spend your time dreaming about your new Island home. Call our sales team today, 508 627-4567 ext 2, or feel free to stop by our office at 19 Winter Street, Edgartown, in Nevin Square or you can always email us as well, to schedule a free, no-obligation consultation.
All of the homes pictured in this On Point MV are Point B listings. Please let us know if you would like additional information on these Island homes.
- Realtor.com – https://www.realtor.com/advice/finance/realtor-fees-closing-costs/
- The Balance – https://www.thebalance.com/buyer-s-closing-costs-1798422
- Student Loan Hero – https://studentloanhero.com/featured/student-loans-buying-house/
- Zillow – https://www.zillow.com/mortgage-learning/pre-qualification-vs-pre-approval/