Buying a home can feel a bit overwhelming. Can you afford it? Do you have enough saved up? Are you ready to become a homeowner? Even during a year like we experienced in 2020, the Lake Havasu real estate market boomed. Many buyers find that some of their stress comes from a misconception of the home buying process. Before you take that leap from renting to owning, let me bust a few first-time homebuyer myths for you to ease your mind a little.
First-Time Homebuyer Myths Busted
Homeownership Means Massive Debt
First of all, yes, it costs hundreds of thousands of dollars to buy a Lake Havasu home. However, due to fantastically low interest rates, it costs less to borrow money than ever before. Partner this with tax deductions available to homeowners, you might find that it costs nearly the same to own a home as it does to rent it. And with renting, you never actually own or build equity in the property you live. Plus, if you go with a 30-year fixed-rate loan and make an extra payment each year (or take half of your monthly payment and pay it every two weeks), you can cut the life of your loan down by as much as seven years. For those whose budgets can afford a higher monthly payment, consider purchasing with a 15-year loan to save thousands in interest as well as cutting down your loan term by half.
Must Put 20% Down
Another one of the first-time homebuyer myths that keep buyers from purchasing a property is that they cannot put less than 20% down. Let me bust that one right now. Financial experts suggest putting a minimum of 20% down on your home loan to avoid paying PMI. It also means borrowing less money. Both of these lower your monthly payment. Fortunately, lenders offer several different options that require a much lower downpayment. If you or your spouse currently or formerly served in the military, you might qualify for a $0 down VA loan. Talk to your bank about all of your possible options.
Perfect Credit Score Required
Only 1.2% of Americans can claim a perfect 850 credit score. Luckily, you do not need a perfect score to obtain a mortgage loan. (Another one of those first-time homebuyer myths busted.) Most lenders want to see a FICO score of at least 620. However, there are some loans available to people with scores that go below the 600 mark. Just know ahead of time that you will most likely be paying more in interest. Another benefit to buying a home is that it actually pumps up your credit score once you close escrow. You look much more creditworthy to other creditors when you buy a home.
Sellers Market Equals Bad Time for Buyers
Sure, buying a Lake Havasu home during a buyer’s market makes great sense. However, the Havasu market favors the seller right now. But that does not mean that it is a bad time to buy a home. If you find a good deal and really want to put renting firmly in your rearview, anytime is a good time to purchase real estate. Plus, as I said above, interest rates are really low right now. We cannot know for sure how long that will last. So, if you feel you are ready, start looking now.
You’re Stuck in One Place for a Long Time
Finally, the last of the first-time homebuyer myths I want to bust is that you will be stuck in one place forever. Plan on staying in your home for at least two years if you want to avoid paying capital gains tax when you sell it. But three to five years is a better timeline. That allows for ample time to grow your equity and lower your principal. However, if something happens and you need to sell the property before that, you can do so. You just need the right Lake Havasu REALTOR® by your side.
FEATURED LAKE HAVASU PROPERTY FOR SALE
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