Myths of Real Estate

“Looking at Homes Is the Best First Step”

Assuming that you will be financing your purchase, the first step is to get a preapproval letter — or a prequalification letter at a minimum — from a lender of your choice. This will not only prepare you to make an offer when the time is right but will also help you to focus your search within the price range that you qualify for and are comfortable with.

“Renting is always more affordable than buying.”

While renting may appear to have lower upfront costs, it's important to consider the long-term financial implications. When you rent, your monthly payments go towards the landlord's income, whereas with homeownership, your mortgage payments build equity and contribute to your own assets. Additionally, mortgage interest rates and tax benefits can make homeownership more financially advantageous in the long run. It's essential to evaluate your personal circumstances, financial goals, and market conditions to determine whether renting or buying is more affordable for you. Check out our Rent vs. Buy Calculator in the Buyer Section! 

“You need a perfect credit score to buy a home.”

While having a good credit score is important in the mortgage approval process, it doesn't necessarily have to be perfect. Lenders consider various factors when evaluating a borrower, including credit history, income, debt-to-income ratio, and down payment amount. While a higher credit score can offer better loan terms and interest rates, there are loan programs available for individuals with lower credit scores as well. It's always beneficial to work on improving your credit score, but it's not an insurmountable barrier to homeownership. Consulting with a mortgage professional can provide you with more personalized insights into your specific credit situation.

“You must have a large down payment (20%) to buy a home.”

There are many programs, such as FHA mortgages, where you only need as little as 3.5% down, and some of the closing costs can be covered as well. You can even put as little as 5% down on conventional loans. 

“Buying a home is a risky investment.”

While any investment carries some degree of risk, real estate has historically proven to be a sound long-term investment for many individuals. Homeownership provides various benefits, such as potential appreciation in property value, tax advantages, and the opportunity to build equity over time. Additionally, owning a home offers stability, security, and the ability to customize and personalize your living space. Like any investment, it's important to conduct thorough research, consider market conditions, and make informed decisions.

“The best time to buy or sell is in the spring.”

While the spring season traditionally sees increased real estate activity, that doesn't necessarily mean it's the only optimal time to make a move. The real estate market can fluctuate throughout the year, and the best time to buy or sell depends on various factors such as local market conditions, personal circumstances, and individual goals. Ultimately, making a well-informed decision based on your needs and market conditions is key, regardless of the time of year.

“Real estate agents are only necessary for buyers.”

While buyers certainly benefit from the expertise and guidance of a real estate agent, sellers can also greatly benefit from their services. Real estate agents have extensive knowledge of the market, pricing strategies, marketing techniques, and negotiation skills that can help sellers navigate the complex process of selling a property. They can assist with pricing the home competitively, staging it effectively, marketing it to potential buyers, and negotiating the best terms and price on behalf of the seller. Additionally, real estate agents can handle the paperwork, legalities, and coordination of the entire transaction, ensuring a smooth and successful sale. Whether you're buying or selling, working with a skilled real estate agent can be invaluable in maximizing your results and minimizing the stress of the process.

“The down payment is the only upfront cost.”

Don't forget about closing costs! Many closing costs are negotiable, so you can ask the seller to pay them. If you need to finance closing costs, ask your lender about an FHA loan where some closing costs can be added to the loan.

“Buying a condo is just like buying a home.”

You might think you can do whatever you want in a condo and that there are no rules. Yes, for the most part, you are allowed to do whatever you want to the inside of the unit you own. But you still need to get approvals from the condo board (HOA) and, when necessary, the architect for the condo. Also, keep in mind that most HOAs have strict rules about what's allowed outside the unit. 

“There’s Plenty of Time for Pre-Approval When You Find the Right House.”

Most offers will not be accepted without a lender's approval letter. Potential buyers who have their approval letter in hand will be in a better position to move quickly with a successful offer.

“Schools don’t matter if you don’t have kids.”

When it comes time to resell your home, those in the better school districts will hold their value better and give you a better return on your investment. So if it’s within your budget, consider buying a home in a good school district.