April Fool’s Day is full of tricks and gags, but buying a home is no laughing matter. Don’t be fooled by the many myths and misconceptions surrounding home buying and the purchase process! Read on to learn the truth about some of the most common home buying myths so you can purchase your home with confidence.
Myth #1: It’s Okay to Max Out Your Budget
Buying a home, especially if it’s your first, is an exciting and emotional process. You’ve likely spent months or even years dreaming of owning your own home. However, that doesn’t mean that you should buy at the top of your budget to get more bells and whistles on your home if it puts you at risk of financial instability. More important than having everything on your wish list is long-term financial health. After you meet with a lender and determine how much you can borrow, take stock of how much you are comfortable with spending—not just this year but for decades down the road.
Myth #2: You Need a Huge Down Payment
For years, lenders requires 20 percent or more down on a home before they would make a loan. Those days are now in the past but unfortunately, this belief in a requirement for 20 percent still exists. While a 20 percent down payment is great if you can afford it, many buyers can now secure a loan with a much smaller down payment. If you qualify for a VA Loan, you may be able to receive 100 percent financing, and with HFA loans like the NC Home Advantage Mortgage™ with down payment assistance up to 5 percent, you can purchase your home with little or no money down or give your existing down payment a boost! First-time home buyers or military veterans who qualify for the NC Home Advantage Mortgage™ might also be eligible for $8,000 in forgivable down payment assistance with the NC 1st Home Advantage Down Payment.
Myth #3: Home Ownership Saves You a Bundle in Taxes
While this may be true for some homeowners, for many, the savings in federal and state taxes that you get from writing off interest, property taxes and other deductible items are little to none. This is because most taxpayers don’t itemize their deductions since the standard deduction works best for them. Before you go into a home purchase dreaming of a significantly lower tax liability for the next 30 years, talk to your tax advisor to see what a more realistic expectation might be. In addition, you should never purchase a home with the expectation that it will save you money on taxes down the road. After all, tax brackets, tax laws and many other factors are sure to change over the life of your loan.
Myth #4: The Best Time to Buy Is (Enter Arbitrary Season Here)
While the “home buying season” has commonly been in the spring and summer, in today’s market, the real estate market is hot all year long. In fact, if you wait until the traditional season to buy a home, you might miss out on some great homes that are on the market early. The best time to buy a home is when you are ready to make the commitment to home ownership, not a certain time of the year.
This April Fool’s Day don’t let these home buying myths fool you. The NC Housing Finance Agency has many resources for home buyers in North Carolina to help them understand the home buying process and learn more about affordable mortgage options that might be available. To learn more, visit www.HousingBuildsNC.com.
