When you’re planning to buy a home, there are certain key items that everyone knows you need to have.
You should ideally have a strong credit score. You should have a solid employment history. And, in a perfect world, you would also have a substantial amount of money saved up for “just in case”.
But when it comes to the other, less-publicized aspects of becoming a homeowner, do you know the difference between fact and fiction?
Here are 4 common myths about buying a home that could actually be keeping you from getting the house you want.
Myth #1: You Need a Perfect Credit Score
For many people, a perfect credit score is basically a one-way ticket to the financial A-list.
Lenders practically climb over their desks to approve your loan applications. Credit card companies are constantly looking for opportunities to offer you more credit. And the important question for banks whenever you apply for a loan is, “How much do you need?”
But the truth is that while amazing credit can open a lot of doors, you don’t need an out-of-this-world credit score to be approved for a mortgage. In addition, even if your credit score could use a little TLC ahead of your application, there’s a lot that you can do to give it that last-minute touchup.
You’d be surprised at how basic things like paying down outstanding credit balances, making payments on time, and not applying for new credit within a short timeframe can improve your credit score without requiring much effort on your part.
Myth #2: Self-Employed People Have No Chance of Getting Their Mortgages Approved
There’s a lot to like about being self-employed.
You get to be your own boss, you don’t have to worry about office politics, and the job security is on another level.
However, there is one aspect of self-employment that doesn’t always get talked about in entrepreneurship circles:
A traditional employee can prove their income with pay stubs and a letter from HR.
But a small business owner or a freelancer may need to provide more documentation in order to qualify for a mortgage.
However, just because there may be a little more paperwork involved, that doesn’t mean that getting approved is impossible.
And with non-bank lenders increasingly offering mortgages to self-employed workers, there’s no shortage of financing options available to Americans who don’t earn a traditional paycheck.
Myth #3: Go for a Fixer-Upper if You Can Find One
Some people decide to buy a house one day and instantly find everything they’re looking for and more in a listing.
But for many aspiring homeowners, there’s an element of compromise that goes into buying a house.
Maybe you love the neighborhood but feel like it’s a little too far from the local school. Or maybe the living room is a little smaller than you would have liked, but the kitchen is to die for.
If you spend enough time weighing pros and cons like this, it’s easy to start falling in love with the potential of the houses you’re seeing. And from there, you’re not too far away from thinking, “That fixer-upper across the street could allow me to live here cheaper.”
However, you may want to think twice before you make an offer on a fixer-upper.
According to Home Advisor, the average cost of a home remodel is $46,664. If the repairs needed are extensive, that number can go up even more.
While a fixer-upper might be cheaper to buy upfront, those backend costs can really sink a budget if you don’t take the time to do a thorough cost-benefit analysis.
Myth #4: You Don’t Need a Real Estate Agent
From filing taxes to doing home renovation projects, we live in a Do-It-Yourself era.
So much so that there are entire YouTube channels dedicated to giving people tutorials on different subjects.
As a result, it’s not unusual to see people browsing through home listings and thinking, “How hard could this be?”
However, the real estate industry can be complicated. Not only do you need to have a sense of local market dynamics and fair market value, but you also have to understand the logistics of touring houses and making formal offers.
An experienced real estate agent can make your transition from interested buyer to homeowner a lot easier.
Conclusion
Buying a home isn’t something that most people do every day. As such, it’s easy for certain misconceptions to indirectly complicate your search for that dream house.
What other myths and misconceptions could be holding back your house-hunting efforts?