If you are planning to buy a home, you may have questions and concerns. You may also be plagued with misinformation. There are way too many real estate myths circulating. So before you start on your home buying journey, get the facts so you can make the most informed decisions.
Myth One: The Only Upfront Cost is the Down Payment
While the down payment is the largest sum you’ll need to pay, it’s not the only one. Your real estate agent, closing attorney, and lender should all explain the different applicable fees associated with buying a home during the process.
You’ll be responsible for a variety of closing costs including title insurance, attorney’s fees, the appraisal, taxes, and property insurance. Depending on the situation, buyers might negotiate some of the closing fees to be paid by the seller. However, in a “seller’s market,” this is more unlikely. The average closing costs for buyers in N.C. based on a $200,000 loan are around $2,000.
Myth Two: An Appraisal and a Home Inspection Are the Same
If you’re purchasing a home and using a loan to do so, your lender will require an appraisal. The purpose of the appraisal is to determine the possible risk in lending money to you. An appraisal puts a value on the home. The appraisal should be the same or more than the purchase price.
A home inspection is much different. It’s performed by a licensed home inspector who examines all the features of a home. The inspection should reveal if things like the electrical, plumbing, and HVAC are working properly. Based on the home inspection, you can negotiate repairs with the seller.
Myth Three: Home Prices Are Based on Square Footage
Square footage is only one factor in a home’s price. Homes can have the same square footage and have completely different prices. Sometimes this is a reflection of the neighborhood. But even similar sized homes on the same street can have a variation in price. One may have been newly renovated increasing its value while the other has not.
Myth Four: Building is More Expensive than Buying
This is somewhat true and somewhat false. The minimum price point to enter into the new construction market is higher than the starting prices for existing homes. There are many factors in the market that make the costs for either of these situations fluctuate. In a low inventory market, existing home sales have seen higher growth year over year than the price for new builds.
These are a just few real estate myths that needed to be debunked. You should be able to rely on your resources—your real estate agent, lender, and closing attorney—to get all the details. Be informed from the start, so you can be prepared for purchasing your new home.