5 Common Myths About Buying a Home
Deciding to buy a home is an exciting decision and a major investment. Depending on your plans and your financial situation, making this big step is not to be taken lightly. But sometimes misconceptions about what is required can stand in the way of a home purchaser taking that important step.
As experts in home lending, we’re here to help make buying your dream home a reality. Read on for five common myths we hear from potential home buyers, and what is actually true. Remember, every situation is unique so contact your mortgage lender for more information and accurate guidance based on your personalized needs.
Myth #1: I Need a 20% Down Payment
A common misconception is that 20% of the purchase price is required for a down payment. Not true! Whether your down payment is 3%, 10%, 15% or something else, your mortgage lender can share what scenarios are possible based on your circumstances. Seeking a mortgage loan is just the beginning, as different programs or grant opportunities may also impact your unique situation. With many different approaches available, it is always a good idea to build up your savings prior to a major purchase.
Related: Try These 5 Hacks to Grow Your Savings Nest Egg
Myth #2: My Rent Payment is Cheaper Than a Mortgage
We’ve heard many people claim that they cannot afford to purchase a home. While much of this is due to the misconception that saving for a 20% down payment is required (see myth #1) people also assume that the costs of buying a home are much higher than renting. But this doesn’t take into account rising rents, and how quickly rents can be adjusted by landlords. With a fixed rate mortgage, your monthly payments are stable and predictable. On the other hand, according to recent studies over 52% of renters who have been in their current rental for 12-24 months have seen an average rent increase of 13%. And research indicates that rental prices will continue to increase in 2023 and beyond.
Understanding your unique financial circumstances allows you to know your options. It is also a good idea to know your credit score, as this important factor plays a role when seeking a loan.
Related: Understanding What Your Credit Score Means
If you are unsure of your credit rating, or you would like tips to raise your score, Fidelity Bank is here to help! Our personal banking customers are able to enroll in online banking and gain access to our Credit Alert services which allow you to closely monitor your credit without any penalty. Learn more about what’s included.
Myth #3: Houses at Same Price Have Same Payments
The listing price of a home can provide an initial estimation of regular loan payments—but be aware there are other factors that alter payments. The property taxes and insurance for the location are two factors that are based on the address. Home association fees could also be applicable depending on the property. Your mortgage lender can help you determine all factors that would be included in your monthly payment so you can make sure your budget estimations are accurate.
Myth #4: I’ve Locked My Rate, So I’m Okay to Make Big Buys
While you are in the process of purchasing your home, activities like buying a car can actually jeopardize your mortgage loan. Requesting an auto loan or making large deposits are things that could hurt your mortgage loan. During the entire process of securing your new home, staying consistent with your accounts and your credit profile is critical. Seeking new lines of credit with a car purchase or getting a new credit card all means that your credit score will be pulled again. Even with interest free financing offers there will still be some payment implications, which can cause issues with your mortgage loan. Before making any purchases or account changes, be sure to contact your mortgage loan officer for guidance. We are here to help ensure you have a smooth process when buying your home.
Related: What Mortgage is Best For You? A Breakdown of Common Residential Loan Options
Myth #5: I Should Wait for Warmer Seasons
While traditionally most house shopping occurs in the warmer spring and summer months, the wintertime can bring some unexpected benefits. Winter can bring lower prices, a better chance of negotiating, fewer bidding wars, and even a speedier process overall. In cold-climate states the late fall through winter could have fewer homes for sale, but there are still good homes to be found. Don’t be afraid to search for a new home on your schedule — even if that’s during the colder season.
Related: Do House Hunting Deals Heat Up During Cold Months?
Connect With Us!
For more information about the process of purchasing a new home, our 8 Common Steps When Buying A Home is a helpful guide to know what to expect. Get in touch! Our team of Fidelity Bank lending experts are here to help, whether it’s getting pre-qualified for a mortgage, setting your home purchase budget, or answering any other questions.
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