Everyone knows that purchasing a home today is very different than in the 1950’s. But the truth is, home shopping today is completely different even than ten years ago. What was known for a fact in 2003 is no longer valid. So, in case you plan to purchase a home, you should know the realities of the day, in addition to researching reports and analysis. Below are five most commonly spread myths about home-buying.
You need at least a 20% down payment
While in the past people needed a start-up cash of at least 20% of the whole price of the property for a mortgage, today we don’t. You can easily find a loan that requires only 3% for a down payment at most banks. Some lenders will even offer a mortgage deal with zero down payment. So, if you don’t have cash, it’s not really a problem in the most countries around the world. In UAE, it is required to have a minimum of 25% of the price of the house, in addition to the transfer fee of 4% and the agency fee
You need a golden credit score to apply for a mortgage loan
Getting a loan today is actually not so difficult. Besides who has a golden credit score these days? Banks will give you a home loan even though you have some dings on your credit report, or even in a case of bankruptcy. In UAE, the credit report system is fairly new, so a good record with your lender is what counts.
Find a mortgage with a fixed rate
According to real estate specialists, this is one of the greatest myths about buying a home today. 20 or 30-year fixed rate mortgages come with higher interest rates than adjustable rate mortgages. In fact, for 30 years you can pay tens of thousands more if you choose the fixed rate. You need to seek for a professional advice and do the mathematics yourself, before deciding on a loan deal.
Avoid real estate brokers to save money
Real estate agents get between 2% and 7% commission in many countries and the fee is paid by usually by the sellers, unless agreed otherwise. However, this commission will reflect in the total price of the property you are buying. In addition, your agent will also need a commission. So, many people believe if they buy directly from the owner or the real estate broker, they won’t have to pay this extra commission, or at least not all of it. Well, experts say, this just never happens.
Buy a home now if you can afford it
Many will say, you should buy right now if you have the money. Our parents, for instance, believe that buying a home means wealth. This isn’t true – can you afford to maintain a house right now? How long do you plan to stay in this property, or even in this city? Do you have a family? Buying a house or an apartment is a serious, life-long commitment. What you will do if you find a better job in another country? There are many things to consider before purchasing a home, so you need to think twice. And after all, all predictions say the property market will improve in another 20 years or even more.
So, there is no need to hurry, renting is easier, flexible and not so requiring. Of course, owning your home is always best, but you should buy only after researching all possibilities.