Many of you are probably wondering, should I buy a house in 2018? As a first-time homebuyer, you may have expectations of how things will go that may not be completely accurate. You may be letting well-meaning advice from family and friends overshadow what your real estate agent has told you, something that can lead to disappointing, or even disastrous, results.
The idea that you can sit back and let your agent find you the perfect home while you wait has gone to the wayside. Especially in today’s market, homebuyers need to be proactive (even a touch aggressive), or they will lose out on their ideal home in an instant. First-time homebuyer misconceptions can ruin the homebuying experience for many or even prevent some from realizing their dream.
1. You Need A Big Down Payment To Buy A Home
One of the most common misconceptions I still hear is how much money down is required to purchase a home. This limits some potential buyers who don’t know all the options or don’t realize there are programs out there that an experienced loan consultant can customize with them to get the best loan program with little to no money down.
2. Realtor Advocate Services Will Cost
Buying a first home is scary, overwhelming and exciting. The largest hurdle is where and how to start. Most buyers do not know that realtor advocate services are free to the buyer. So they are fearful to hire an agent. A realtor has fiduciary responsibilities to protect buyers. They assist buyers with everything from financing and finding that dream home to negotiating the best price, and a smooth close
3. Renting Is Cheaper Than Buying A Home.
Oftentimes, over the long term, buying a home can be a better alternative to renting. This is because mortgage costs stay the same as rents Rise. If you get a fixed-rate mortgage on a home purchase, your mortgage payment can never change. Unless a renter is in a rent-controlled building or neighborhood, their rent is at risk of rising every year.
4. The Real Estate Agent Will Handle Everything
Many first-time homebuyers believe that a real estate agent will be able to tell the buyer how to do everything. They can help a buyer, but the more a buyer learns on their own, the better decision they can make. A real estate agent may not be able to legally give an opinion on neighborhoods, schools or crime. A buyer should learn their market to ensure they get what they want at a fair price
5. Additional Features And Finishes Can Be Done Later
A common mistake first-time homebuyers make is not paying for the features and finishes they desire upfront. This limits their ability to add them in the future and may hurt resale value.
6. People Really Need To Buy A House
The main misconception is the idea that you should buy a house. That’s pouring a huge part of your equity into a very risky investment. If you lease it out, consider that a tenant leaving represents 100% vacancy. If you live there, it reduces your cash flow and binds you to the location, while keeping you enslaved to your mortgage.
7. There’s Only One Way To Buy A Home
People generally think they can’t get into the high price of the LA real estate market at $750 per square foot and above. I’d recommend buying a 4,000-square-foot fourplex in LA, which can be found for $300 PSF. Combine the top two units for a 2,000-square-foot primary residence, keep the bottom two as rentals that go toward the mortgage and operating expenses. It cuts the PSF cost in half and significantly reduces operating expenses and mortgage