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 real estate myths. If you dig a little deeper, you will quickly realize there isn’t much truth to the rumors. Your North Orange County Escrow Experts explain these top 5 real estate myths!
Real Estate Myth #1: Save Money and 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 trained and many are very good at negotiating on your behalf. Their knowledge allows them to effectively work through unexpected incidences, communicate with the seller on your behalf, and work 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. So save yourself the headaches and time of doing it alone and find a real estate professional in your area who specializes in the kind of home you’re looking to buy!
Real Estate Myth #2: Don’t Start House Shopping Until You Have 20% in the Bank
A 20% 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% down. Speaking with a lender is the best way to learn what’s available and what you qualify for when you’re ready to purchase your new home.
Real Estate Myth #3: Don’t Delay, Buy Today
Frenzy. Many have used this word to describe the national real estate market in 2013 and into 2014. As prices pushed higher and many markets saw bidding wars, buyers were prompted off of the sidelines to get into 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!
Real Estate Myth #4: 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!” But this is not the case! Lenders are more willing than ever to work with interested buyers. They have realized that many were hard-hit during the economic downturn in the way of job loss, foreclosure, and so forth.
Real Estate Myth #5: 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, leading to the high amount foreclosures the nation experienced. That’s why so many people are preoccupied with a fixed-rate mortgage to avoid these large rate fluctuations and the chance for foreclosure.
According to David Reiss, a professor at Brooklyn Law Schools who specializes in real estate, “the necessity of getting a 30-year fixed rate mortgage is one of the biggest myths about buying.” He explains that the average American household stays in their home for about 7 years, only. But with the hype for a fixed-rate mortgage, more Americans are seeking that 30-year fixed rate mortgage which typically have higher interest rates than ARMs. He concludes that home buyers should take a hard look at their plans for a new home.
For more clarification on these myths and any other burning real estate questions, talk to me or any one of our North Orange County Escrow Experts today!