Our Real Estate Blog
When it comes to home buying a home, there’s a ton of different information available out there. A lot of what has been presented as “fact” actually is quite false. These misconceptions could keep you away from achieving the very real dream of home ownership. Below, you’ll find some of the most common myths that you’ll find about home buying.
If Your Credit Score Isn’t Up To Par, You Can’t Buy
To get good mortgage rates, having a good credit score doesn’t hurt. You can still buy a home if you don’t have amazing credit. A low credit score means that your mortgage rates will be higher than the average. There are loans like FHA loans, that allow for you to get a loan with a credit score as low as 580. Don’t let a lower credit score discourage you from buying a home. If your credit score is low, there are plenty of things that you can do to help you fix the score in a short period of time.
You Need 20 Percent Down To Buy A Home
This is a long-standing myth about home buying. While putting down 20 percent on a home purchase saves you the extra expense of Private Mortgage Insurance (PMI), you can still be in the running to buy a home if your down payment is less than 20 percent. There are even some home loan programs that allow buyers to put as little as 0-3 percent down for the purchase of their home.
You Have To Make A Lot Of Money To Buy A Home
Your monthly income is one of many aspects of your financial life that’s considered when you’re buying a home. Home loans can be denied to those who make a large income just as easily as to those who have lower incomes. What matters is the debt-to-income ratio, which tells lenders how much debt a buyer has compared to the amount of income the buyer makes each and every month. Keep your debt down, and you’ll be in good shape to buy a home.
You Don’t Need To Be Pre-Approved To Get A House
Being pre-approved gives you an upper hand in the home buying process. Being pre-approved allows your lender and you to go through the entire process of getting a mortgage. When you find a home that you love, you’re able to breeze through the process of making an offer if you’re pre-approved. The pre-approval process is one of the most important aspects of buying a home.
If you’re prepared with knowledge, buying a home isn’t such a daunting process after all. Find a realtor you trust, understand your finances, and the rest will fall into place!
Don't make a mistake that some first time home buyers make. Don't fall in love with a house a few days or weeks after you start shopping for a house. Even if the house is large enough to comfortably fit all of your furniture, you could regret deciding on a house to buy so early.
You could regret buying a house less than a year after you move in
If it helps, think of shopping for a house similar to dating. You won't see everything about a house during the first visit. Enter into a closing deal too soon and you could miss seeing several other houses that would in the long term cost you less money to maintain.
Buy a house too soon and you could over look structural damages at the house. For example, you might miss or overlook water stains on walls, ceilings or floors because you can't stop thinking about how spacious and modern the kitchen is. You also might:
- Get upset when your spouse or friends point out shortcomings with the house that you've gotten too attached to. Rather than to face the fact that even the house you love has drawbacks, you force yourself and everyone else to perceive of the house as perfect.
- Pay thousands more for a house than you should have. You want the house so badly, that you're willing to pay nearly anything to own it.
- Focus on one to three features of the house but ignore the fact that the house is located in an area that adds 30 or more minutes to your work commute.
- End up buying a house that you love and your spouse or children hate.
- Take on the need to pay for ongoing upgrades and renovations.
- Become sad or angry when you realize that you don't like the community that the house is located in. For example, if you love the fast pace of a big city and the house you fell in love with is in the suburbs, you might feel too far away from the center of town. You might feel bored.
- Lack nearby places to take your children for fun and entertainment.
- Increase the distance between you and your parents, siblings or friends.
Consider as many factors about your next house move as you can
Getting too attached to a house could cost you months of peace and quiet. Fall in love with a house that needs a lot of love and care and you could convince yourself that,with just a few renovations, you can turn the house into the perfect place to live. Three to four years later, construction might still be going on at the house, annoying you and your family.
It's this type of drawback that can put strain on your relationships. You and your spouse might end up arguing about the house more than you end up bumping heads about anything else. If your children hate the schools that are located in the jurisdiction where the house you fell in love with is, their mood and disposition might take a dip as well. Avoid these headaches by taking an objective approach to house shopping. Consider as many factors about each house you love before you decide to buy.
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Is it better to rent or buy? There is no simple answer to the question, yet it’s something we all ask ourselves at some point in our adult lives.
When you ask yourself this question, you’re not just determining whether it’s more affordable to buy or rent. Rather, you’re answering questions about what your life will look like in the coming years--in terms of both lifestyle and location.
In this article, we’re going to talk about the issue of buying vs renting. We’ll talk about ways you can educate yourself to make the most informed decision possible. After all, whether you’re buying a home or signing a lease, this is a decision that will affect a large amount of your time and dictate at least the next year of your life.
Before you start thinking about mortgages and leases, it’s a good idea to get an idea of the market. Specifically, you’ll want to look at the cost of living for the area you plan on moving to. It may seem like common sense that the cost of apartments and houses will rise and fall at the same rate, but evidence points to the contrary.
Elements that are out of your control could be things like:
Property tax amounts
Inflation and cost of living changes (gas, utilities, etc.)
Stock market variations, which affect your investments
Real estate market changes
Income changes (job change or loss)
As you can see already, these outside influences have the potential to make a huge impact on whether it makes more sense to rent or buy.
Let’s say you decided to rent a home and put the money you would have used for a down payment into an investment fund. You have a good year and earn 5% on your investments. At the same time, the price of homes as gone down significantly in the area you hope to move.
As you can see, in this scenario it would probably make sense to pay rent for a year before buying a home.
Out-of-pocket expenses and equity
One of the biggest advantages of owning a home is that by definition, if you are making sufficient and timely mortgage payments, you are earning equity. Equity can be used later to make a down payment on a larger home, or for selling to use toward retirement funds later in life.
On the other hand, renting is an out-of-pocket cost that comes at a loss. Once you pay rent, there is no getting it back to use later on.
It may seem like buying is the obvious solution, then. However, there are also many out-of-pocket costs for owning a home. Property taxes, insurance, and interest paid to your lender are all things that you can’t recuperate.
Finding out whether it’s cheaper to buy or rent will come down to balancing those factors, and weighing them against the odds of the real estate market.