Three Buyer Myths Debunked

The process of buying a home today has evolved a great deal over the past ten years and if a potential buyer has not done their homework on the current market they might be suffering from some misconceptions that are negatively influencing their decisions.

Myth #1: Stellar credit is required to get a home loan.

The fact of the matter is that a credit score of 640 coupled with current employment may qualify you for a variety of conventional loan products even if you have had a foreclosure, short sale, or bankruptcy as recently as a year ago. A new FHA program called ‘Back To Work’ cuts the time to qualify for a new mortgage to a little as one year under certain extenuating financial circumstances.

Myth #2: If you don't have a 20% downpayment don't even try to buy a home.

Conventional loans and FHA loans can be had for as little as a 3.5% downpayment and VA loans can cover 100% of the purchase price. Conventional loan down payments are expected to rise to 5% in November but that is a far cry from 20%.

Myth #3: Cutting out the buyer's agent will save you money.

Listing agents normally sign a contract with a seller for a stipulated percentage commission. If that commission were 6% the listing agent would normally share half of that amount with the agent representing the buyer in a ‘co-brokerage’ agreement. If a buyer chooses to deal directly with a listing agent this can be done through dual agency representation by the listing agent but the full comission is still paid to the listing agent. An aggressive buyer might get a seller to reduce their price 1% by representing themselves but a full 3% is highly unlikely.

Potential buyers are best served by consulting with a professional REALTOR for an assessment of their situation and needs and for advise on opportunities the market presents to them.