Author: Dan Rafter / Source: Wise Bread
You’re ready to own a home. And you think you know the basics involved in finding one, working with a real estate agent, and applying for a mortgage. But buying a home for the first time can be a confusing process. This is especially true if you believe certain myths about searching for and making an offer on a house.
If you want to alleviate some of the uncertainty that comes with buying your first home, it’s time you learned the truth about the homebuying myths too many consumers still believe.
1. Working with a real estate agent is expensive
Actually, if you’re working with a real estate agent to buy a home, it’s free. Buyers usually don’t pay for the work their agents do in helping them find and make offers on homes. When you buy a home, the sellers typically pay the commissions of both your agent and theirs. The funds for this come from the proceeds of the home sale.
You will have to pay plenty when you buy a home, including the many fees and costs that go with taking out a mortgage and hiring inspectors. But you won’t pay anything to your real estate agent. So there’s no good reason to skip working with a real estate agent if you are a buyer. (See also: 5 Things Your Real Estate Agent Wishes You Knew)
2. You need a down payment of 20 percent
Applying for a mortgage is another nerve-wracking part of buying a home. You’ll pay thousands of dollars to your lender and other third-party providers to close the loan that allows you to buy your new home.
But you probably don’t need to come up with as big of a down payment as you think.
Many buyers mistakenly think that they need to come up with a down payment equal to at least 20 percent of a home’s final purchase price. That can be intimidating: A 20 percent down payment on a home costing $200,000 comes out to $40,000 — a lot of money.Fortunately, you can buy a home with smaller down payments. FHA loans, for instance, often require down payments as low as 3.5 percent of a home’s final purchase price. You can also qualify for conventional loans with down payments as low as 3 percent.
Remember, though, that you must pay for private mortgage insurance — better known as PMI — if you don’t come up with that 20…
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