Have you thought about owning a home, but just felt like it was too out of reach right now?
While you have to be in a position for it to make sense, there are some myths that may be preventing very eligible buyers from taking the leap!
This blog post will reveal the reality of these real estate myths.
Myth 1: Rent is cheaper than a mortgage
There are a lot of factors, but oftentimes mortgages could be cheaper than rent. Especially when interest rates are very low, mortgage payments are even more competitive. And, a portion of that payment is you paying yourself in equity rather than paying for someone else’s mortgage.
Myth 2: I don’t have 20% for a down payment
In most cases, especially for first-time home buyers, you don’t need to put 20% down. Colorado has a first-time homebuyer program where you can qualify with as little as 3.5% down. For a $200,000 house that is just $7,000. Federal Housing Authority (FHA) loan programs allow for lower down payments but sometimes come with other conditions for qualification. Conventional loan programs can also be achieved without 20% down, but may require Private Mortgage Insurance (PMI). This seems scary, but you only pay it until you reach the 20% equity, so it is not permanent.
Myth 3: I have to be a doctor or make six figures
Plenty of people qualify for homeownership without having fancy jobs. Certainly, having a higher income gives banks more flexibility in loan terms, so it does help. However, there are options for median-income earners. There are low-income loan programs, such as Elevation Community Land Trust in Denver, or the Summit County Housing Authority here in Summit, which provide down payment assistance or access to specific homes for qualified buyers. There are options if you are willing to research and work for it.
Interested in learning what you qualify for? Reach out and let me know!
Myth 4: I don’t know how to fix pipes or replace furnaces
It is certainly easier to call the landlord. But if you and your agent do your due diligence during the home buying process you should have a good idea of what you are signing up for. You may have an HOA that does exterior maintenance. Or you may be a handyman who can fix everything yourself. Know the maintenance routine, check out this blog to learn more, and then budget for that maintenance. Google is powerful, and Home Depot or Lowes actually have most of what you need! Don’t let a little unknown stop you from taking the leap!
Myth 5: I can wait until later down the road
Homeownership is like buying houses in Monopoly (sometimes with a little more on the line depending on how competitive you are). But you can never win if you don’t start. It is risky, it is scary, and it is certainly the biggest check you will write. However, it is like your economics teacher talking about the time value of money.
Homeownership pays you back in equity, so the principle part of your monthly payment is your ownership of the home that you get credit for when you sell. Homeownership pays you back in appreciation. Generally, home prices go up in the long run. I found my Grandma’s deed from 1954 when she purchased the house for $18,000. I bought it from her for $260,000. In Denver, homes have appreciated 67% over the last 5 years. Homeownership builds your net worth. Today, the median household net worth of all homeowners is $254,900, while the median net worth of renters is only $6,270.