Home Buying Advice MSP
Home Buying Advice MSP
One thing I know for sure is the passage of time always brings change in its wake. Fashion, food, hairstyles, home décor, and lifestyles have become extremely sensitive to trends. Some embrace change and others fight it. Whichever the case, a constant we can depend on is trends are going to come and go regardless.
Sifting Through Home Buyers Advice
Along with changes in style, there is an incredible amount of advice available about what we should hold on to and what we should let go. Real estate is no different, and it is essential that we weed through all the bits and pieces of information and discover what is still meaningful and what no longer serves us when we decide to put a roof over our heads.
Purchasing a house is the most expensive buy of a lifetime for most of us. It is predominately a joyful experience, but a certain amount of stress is inherent in the process, especially for first-time homebuyers. We want to make the right choices, so we look for advice from family, friends and the internet. But with so many tips out there, how do we know which are keepers and which we should ignore? Here are several pieces of home buying advice that have not met the test of time.
You Will Always Be Better Off Owning Than Renting
Bad Advice. There are occasions when renting is a far better option than buying. If you plan to move in less than five years, you may not recoup what it will cost you to buy and sell your home. Renting may be a better fit for someone who would resent time spent doing home chores like mowing the lawn and seasonal maintenance. Perhaps you travel a great deal for business and renting a small apartment makes more sense personally and financially.
Good advice: One size does not fit all when it comes to the question of should you rent or buy. Evaluate your situation, personal preferences, and work-life balance and make a decision based on what will work for you now.
Never Buy a House in Winter
Sorry but this one is complete hooey! I’m going to list reasons winter is a great time to buy a home. You’re smart. You decide.
- Fewer buyers mean less competition for homes
- Less competition increases the chances of closing a deal
- Winter sellers often have a compelling reason to move and will be more likely to compromise with buyers
- The closing will be faster because lenders, inspectors, appraisers, and Realtors are all less busy.
- Movers have more openings and many offer discounted off-season rates
- By summer instead of house-hunting/moving/unpacking, you will be enjoying your new back yard oasis and favorite activities of the season.
Good advice: There is never a wrong time to buy a home when you are ready. You can as easily find your dream home in December as you can in April.
Don’t Buy a House Until You Pay Off Student Loan Debt
There is nothing to say you can’t buy a home if you have college loans or that you should wait. Many who carry student loans can meet the debt-to-income ratios for a mortgage. There are programs available that can help buyers without down-payments, with lower credit scores, or higher than is customary debt/income ratios.
If your salary allows you to pay your student loan debt and apartment rent, you should be able to buy a home. Speak with a lender and find out if you qualify and if not, what you need to do to get there. I’m not saying it’s going to be easy, but for many it is possible. Here is an excellent article from Forbes which covers the topic well. The last word, according to a study by Magnify Money 34% of millennial homeowners carry student debt.
Good advice: If you can comfortably afford rent, have a decent credit score, and some money saved by all means pursue your dream of homeownership and pay off your student loans like you would any other financial obligation.
Unless You Have a 20% Down Payment You Should Not Buy a Home
File this one under “moonshine.” Especially in areas where buying is less costly than renting, this is terrible advice. Sure putting 20% down is probably ideal, but in the real world, we sometimes need to embrace what is practical. Saving enough money to put down on a home for many new buyers is near impossible given the high cost of rents and other expenses.
That is why there are programs out there where you can buy a home with 3% down, 3.5% or even 0%. Yes, you will be required to pay PMI (private mortgage insurance), but in many cases, you can have that removed when you reach 20% equity in your home.
Good advice: If you are ready to buy a home don’t put it off for years waiting to save that ideal 20% down payment. The rising costs of rent, home values, and interest rates may cost you more than a few years of PMI. In the meantime, if you buy a home, you will be building equity and asset value as a bonus.
You Should Always Get a Fixed Rate Mortgage
You have probably heard the horror stories about people that took out an ARM (adjustable rate mortgage) and lost their homes back in the housing market crash of 2008. Many of those were one to three-year teaser rates meant to get people into homes they could not afford.
But If you know you only plan to stay in a home for 5-7 years, there may be an ARM that fits your needs that will save you money and be a better option than the 30 year fixed rate.
Good advice: It’s always the best idea to explore the pros and cons of all your options before you make a significant life decision.
If you have been trying to decide if 2019 is the year of the home I hope this helps. If you want to talk over the home buying process, are ready to begin your buying journey, or at any point in between don’t hesitate to contact our team.