By Jeremy DeLay, Tulsa Home + Design Realty
Since I’ve become a Realtor with Tulsa Home and Design, I’ve been struck by the number of people I talk to who don’t own a home, almost completely out of fear and/or misinformation. Yes, buying a home is a big decision and major commitment, but it doesn’t have to be so scary that you never take the next step in the process. If you’ve wanted to buy or sell a home, but have been stuck on an idea that’s kept you from it, maybe it’s time to re-examine what’s holding you back. In this article, we will examine 5 common Real Estate myths and, ultimately, why they shouldn’t stop you from buying or selling your home.
- You have to have a 20% down payment to buy a house.
- Getting pre-approved will hurt your credit score.
- You have to find the right house before you get pre-approved for a loan.
- Home inspections are pass/fail, and my home won’t pass.
- If your home isn’t fully updated, no one will buy it.
Gone are the days when you needed 20% of the sales price of your home as a downpayment for a mortgage. Today, with options like FHA, VA, and USDA loans, there are options for down payments as low as 0-3.5%. There are even cases where you can qualify for a conventional loan with less than a 20% down payment, as long as you buy Private Mortgage Insurance or PMI. A good lender can talk to you, assess your personal situation, and help you find a loan that is the right fit for you, and finding a lender and getting preapproved for a loan should be the first step you take in the home buying process. This leads us to our second myth that prevents people from entering the Real Estate market.
Before you ever go look for a house with a Realtor, it’s so important that you are already working with a lender and are preapproved for a mortgage. Especially in today’s market where homes go from listing to sold in just over 2 weeks on average, you want to make sure that you are actually in a position to make an offer when you find the right home for you. The problem is that many people believe that even just talking to a lender can hurt your credit score. Here’s the reality. Getting prequalified, which is sort of a pre-pre-approval, is only a soft hit on your credit, causing absolutely no impact. Once you apply for the actual preapproval of a mortgage, it shows a hard pull on your credit. According to the credit bureau, Experian, credit scoring models will take into account that you might be shopping around and only count several mortgage applications within two weeks to 30 days as one, single inquiry. This means that if you are serious about buying a home, talking to a lender, and even getting pre-approved for a loan will not ruin your credit.
I jumped the gun on this one and talked about it in the last paragraph, but it’s so important it’s worth mentioning twice and being its own point. A lot of people are confused about the basic order of things in Real Estate. They think that they need to shop around and find the perfect place first, before taking any “real” steps towards buying. This couldn’t be further from the truth. As I said before, working with a lender and getting pre-approved for your mortgage is the best first step you can take towards buying a home. Without a solid understanding of what you can actually afford, and documentation showing that a bank will actually loan you the money, shopping for homes will likely be a fruitless endeavor for you. These days, homes sell fast and you can’t make a real offer without that approval (unless you’re paying in cash, in which case, good for you!).
Another myth is really just a misconception, and that is that homes have to “pass” inspection, and if they don’t, you fail. While it’s true that when you’re selling your home, in most cases, an inspection will be required and there are a number of items that will have to meet certain standards, it’s not true that if you don’t pass that’s it. When there are items that show up on an inspection report, your Realtor will work with you and their network of contractors to organize and negotiate the best plan of action for moving forward. There are certainly times when an inspection item can be a deal-breaker, but it’s not all the time and it’s not always cut and dry. Until you’ve had an inspection and talked to an agent, you really don’t know what your actual situation will be, so don’t let this misunderstanding keep you from pursuing listing your home.
The rise of TLC and HGTV shows about home improvement, Real Estate, interior design, etc., while fun to binge, have caused people to have a lot of unreal expectations both for what they can potentially afford in a home, but also what the home has to look like in order to sell. Many people believe that if every room in their home isn’t fully-updated and tv ready that there is no way someone would buy it, and that simply isn’t true. For one thing, there is a whole market for people looking specifically for homes that haven’t been updated, just so they can do the updates themselves. It’s true that updates get you top dollar for your listing, and depending on your ultimate goal in selling, not having updates could keep you from reaching a certain financial goal, but it doesn’t at all mean that your home won’t sell. If you’re worried about your home’s ability to sell in a certain market, talk to a real estate agent and have them do a competitive assessment of your home’s value. You may be surprised at what you find out.
*At Tulsa Home + Design, we work with clients at every step of their home-buying and owning journey to help them find and create spaces to live and grow. Call us today. www.tulsahomeanddesign.com