Common Misconceptions about Buying a Home

As the Greater Lansing housing marketing continues to make a comeback, more people are considering becoming first-time homebuyers. Similar to any other big life decision, seeking advice on whether or not you should purchase a home comes with its fair share of opinions, and are often intertwined with some of the most common misconceptions about home buying. I’m going to help you separate the facts from the fiction to help you make a more informed decision.

4 Most Common Home Buying Misconceptions

I Can’t Afford to Buy

The most common misconception about home affordability is the amount of down payment required. A high percentage of potential buyers believe that a 20% down payment is required. The truth is that many mortgage products are available with as little as 5% down and as low as 3% in some circumstances. Many also believe that only people with high incomes can obtain a mortgage. Again, the truth is that there are many programs specifically designed for moderate income families. A local loan officer can show you a broad array of products that may meet your circumstances.

My Credit Isn’t Good Enough

The average credit score for loans closed in the last two years has dropped by over 24 percentage points and a credit score of 620 coupled with debt ratio requirements and employment will generally qualify you for a mortgage. Requirements vary from lender to lender but the starting point is a meeting with or calling a local loan officer.

Now is not a Good Time to Buy

Some potential buyers may think they have missed the market because average selling prices have risen in the past two years. The two components of home cost are price and interest rate. Looking ahead, we still see an opportunity for price appreciation since average prices are still well below the peaks achieved in 2005-2006. Additionally, all industry pundits expect interest rates to rise and Freddie Mac projects rates to be a full percentage point higher a year from now. With prices appreciating and interest rates rising now could be a great time to buy a home.

Renting is Cheaper Than Buying

You can use the Rent vs. Buy calculator to help you determine which is a better decision for you, but generally speaking buying is cheaper than renting in this market. Be advised that one way or another you’re going to paying a mortgage: either yours or your landlord’s. Why not pay yourself.

Seek Advice From a Local Realtor

Coming to a decision of whether or not you should buy a home is a big decision. Seeking the advice of a trusted, local real estate agent will help you make the best decision based on your personal circumstances.