by Courtney Soinski
Whether you're shopping for your first home or moving onto the next, the home buying process can be stressful. There tend to be some common myths in this process, so it's very important that you're well informed of what is fact and what is fiction. We're here to set the record straight.
Myth #1: You don't need a REALTOR®.
Before you bravely take on one of the biggest purchases of your life, remember this: it's not as easy as it looks. REALTORS® know all the ins and outs of the local area as well as the market in which you're looking to buy or sell. Picking up the phone and calling a real estate agent may be one of the best decisions you'll make.
Myth #2: The bigger the down payment, the better off you'll be.
When buying a new home, a buyer's immediate reflex is to put as much cash down as they can because they'll borrow less, lower the monthly mortgage payments, and won't need to buy mortgage insurance. However, putting 20% down is not a requirement and it's not for everyone.
Thanks to Federal Housing Administration Loans (FHA Loans), you can put as little as 3.5% down. With this method, you'll potentially have a lower interest rate, giving you more flexibility. Your money is not all tied up in your house like in a traditional down payment that can leave you with little or no extra cash to spend on home care, improvements, or any other unforeseen circumstances.
Myth #3: Appraisers set the value of a home.
The role of the appraiser is to produce a credible opinion of value that reflects the current market. Appraisers are not responsible for setting the value of the home and they also do not confirm a home's sale price. According to David S. Bunton, President of The Appraisal Foundation, "Appraisers provide an analysis of the collateral so that lenders understand the value of a property when making the loan decision."
Myth #4: You need perfect credit.
Most people assume that you must have absolutely golden credit in order to get a loan, but that just simply isn't the case. If buyers have less than perfect credit, lenders are often willing to work with them to get the best possible loan.
Credit is not the only thing that lenders look at when deciding to approve a loan, but your score will have an effect on the interest rate on your mortgage. Make sure you review your credit report. If any errors are found, they should be reported to the credit reporting bureaus before applying for a mortgage.