It’s hard to forget the effect the real estate market crash had on many people during the recession, which is why so many myths and rumors continue to permeate this industry. Interested home shoppers tend to buy into five top myths, but if you dig a little deeper, you will quickly realize that there isn’t much truth to these rumors. Here, we explain the top five real estate myths!
Find a Fixed Mortgage: One of the biggest issues during the economic downturn was willy-nilly lending practices that included adjustable rate mortgages (ARMs). Buyers were enticed into a super low interest rate that would later adjust into something they could never afford. That’s why so many people are preoccupied with fixed-rate mortgages. According to David Reiss, a professor at Brooklyn Law School who specializes in real estate: “The necessity of getting a 30-year fixed rate mortgage is one of the biggest myths about home buying. The average American household stays in their home for about seven years. Typically, 30-year fixed rate mortgages have higher interest rates than adjustable rate mortgages (ARMs). Home buyers should take a hard look at their plans for the new home.”
Dinged Credit Will Prevent a Mortgage Approval: Buyers with less-than-perfect credit are usually hesitant to sit down with a mortgage broker and discuss their options because they’re confident the answer will be a resounding: “NO!” Not the case though. Lenders are more willing than ever to work with interested buyers, realizing that many were hard-hit during the economic downturn in the way of job loss, foreclosure and so forth.
Don’t Start House Shopping Until You Have 20 Percent In the Bank: A 20 percent down payment became the magic number during the housing crisis, but it’s not necessarily the amount you need to purchase a new home. There are a variety of loans out there that require considerably less than 20 percent down, and speaking with a lender is the best way to apprise yourself of what’s available and what you qualify for finance-wise.
To Save Money, Forget Working With a Realtor: Unless you have your real estate license, the small amount of money you would save from eliminating a real estate agent is definitely not worth it. Real estate agents are adept at negotiating on your behalf, working through contingencies, communicating with the seller on your behalf, and working through the tall stack of paperwork that a real estate purchase requires. Plus, it’s more common than not for a seller to pay their commission anyway.
Don’t Delay, Buy Today: Frenzy is a word that many have used to describe the national real estate market in 2013. As prices pushed higher and many markets saw bidding wars, buyers were prompted off of the sidelines to get in the game. But buying a home is a big decision and you need to make sure you’re ready for the commitment. Just because everyone else is buying does not mean that today is the right time for you.