If you’re in the market for a new home, you may seek the advice of friends and family before you begin the process. When talking to others, it is important to know there are many myths that prevail about homebuying. Just because something is true for one person doesn’t mean it’s a fact. We are here to clear up a few of these common myths you might have heard.
MYTH #1: Maintaining a Home is Expensive
It’s important to remember that owning a home is more than just making a monthly mortgage payment. It is also important to remember the difference between having to handle your own maintenance requests, while landlords typically handle these when renting. However, if you consider the costs and plan for unexpected expenses, paying for necessary maintenance is typically feasible. The age of the home can impact these costs. A new home built within the last five to ten years will need the least amount of maintenance, while homes about 10 to 20 years old will need slightly more. Once a home turns 20 or 30 years old, it’s likely that major parts of the home, such as the roof, may need to be replaced.
As a homeowner, you should expect to pay between 1 and 4 percent of your property’s value on maintenance, repairs, and replacements of systems or appliances each year. If your home is valued at $150,000, then you should expect to spend between $1,500 and $6,000 each year on repairs. To protect yourself from major unexpected costs, purchasing a home warranty can be a beneficial option to consider. A home warranty is an annual service contract that covers the repair or replacement of important appliances and system components that may break down over time. If you choose to purchase a home warranty, often costing between $300 and $600 a year, maintaining your home becomes more manageable.
MYTH #2: The First Step Is To Find The Home You Want To Buy
Don’t go looking for a home before you know what you can afford. If you house hunt and find your dream home is $250,000, but you are only approved for a $150,000 mortgage, you will have wasted your time and energy. Plus, this can be a disappointing start to the homebuying process. The first step is always to consider your financial situation and work with a lender to get preapproved. Getting preapproved will help you set realistic expectations about what you can afford and stop you from falling in love with the wrong home for your lifestyle. Begin the preapproval process by comparing mortgage types and benefits at elements.org/mortgage.
MYTH #3: You Are Required To Put At Least 20 Percent Down
Traditional mortgages typically have a set 30-year fixed-rate with a 20 percent down payment. Times have changed. Now, you have many options for the length, rate, and down payment of your mortgage loan. For example, our credit union offers a First-Time Homebuyer Program for those who have not owned a home in the past three years. Needing to put at least 20% down is in the past. If you are not a first-time homebuyer, Elements has options for fixed and adjustable rate mortgages, construction loans, and jumbo mortgages.
Now that we’ve busted some of the most common myths that surround the homebuying process, we hope you are feeling more confident about purchasing a new home! Elements is here to support you throughout the process. Contact one of our Mortgage Loan Originators or visit elements.org to begin working toward making your dream a reality.
This information is provided for informational purposes only. It does not constitute legal, tax or financial advice. Consult with your tax, legal or financial adviser before taking any action.