Around 230 million Americans own their own homes.
That accounts for roughly 65% of the total population, which might come as a surprise, given the soaring interest rates and home prices. There's always a lot of gossip about the trials and tribulations of home ownership, especially for first-time buyers. If you're feeling trepidation about the process, we're here for you.
Today, we're going to debunk all the most common homeownership myths that exist today. Don't let the unknown scare you off finding the perfect house to call home; keep reading and quell some of your anxiety.
You Need a 20% Down Payment
In today's housing market, 20% is an ideal down payment number, but it's not absolutely necessary. Seek out a mortgage calculator and punch in different down payment numbers. The difference between 10% and 20% probably only amounts to $100-$200 per month on your mortgage payments.
It's better to live comfortably than to put more money down on a house. If you sink your entire savings on a 20% down payment, you'll put yourself in a worse financial bind. Instead, use a combination of savings and things like first home buyers loans to finance a down payment.
Buying Is Cheaper Than Renting
You always hear from market gurus that buying is cheaper than renting. When you rent, you're putting money in the pocket of another property owner without any equity in return. This is true to an extent, but it's not the whole story.
Home prices and mortgage rates have been steadily increasing over the last decade, as have rental prices. So, the renting vs homeownership debate is completely situational: sometimes it's better to buy and sometimes it's better to rent.
You Need Perfect Credit
Subprime lending was one of the major causes of the housing crisis in 2008. In the aftermath, lenders prioritized good credit scores as a prerequisite for obtaining a mortgage as a mode of caution. That said, you don't need perfect credit to buy a house.
The odd blemish on your credit score shouldn't preclude you from obtaining a mortgage. It will affect your interest rates, however, so the better your credit, the better your mortgage terms will be.
You Just Need a Down Payment
Many young home buyers looking for residential property often assume that once you've got a down payment, you're ready to buy. Having a good down payment is a huge first step, but there's a lot more to think about subsequently.
There are numerous other costs you have to think about, like closing costs, taxes, escrow fees, title insurance, and various others. It's important to find the best realtor you can in order to bring some clarity to the process.
Mortgage Rates Are High
Contrary to popular belief, mortgage rates aren't too high right now. Yes, they're higher than they've been in the last decade, but still quite low when you compare them to the rates of 30-40 years ago.
Today's mortgage rates are sitting around 6-7%. In the 1970s, they were 10-12% and reached nearly 20% in the early 80s.
Cracking Homeownership Myths
Homeownership myths can be enough to scare people into making the wrong decision about their future. We hope we've dispelled enough of them for you to become the smart homeowner that you want to be.
If you enjoyed this, come back again for more real estate and home tips.
