Ever been told you need a 20% down payment to buy a home, or that renting is just throwing money away? These are just a couple of the big real estate myths that might be holding you back or costing you money. Today, we’re setting the record straight on nine of the most common real estate misconceptions. Buying or selling a home is a major decision, and separating fact from fiction can make all the difference. Watch now to make your next real estate move with confidence and avoid costly pitfalls!
Eric Andersen, B.A., M.Div.
Owner/Designated Managing Broker, Andersen Realty Group
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📩 Email: eric@eandersenhomes.com
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Transcript:
Have you ever heard that you need a twenty percent down payment to buy a home, or that renting is just throwing money away? I’m Eric with Andersen Realty Group, and today, we’re debunking nine common real estate myths so you can make smarter choices and avoid costly mistakes.
The first myth is that you need a twenty percent down payment to buy a home. Twenty percent down is great, as it helps you avoid private mortgage insurance. But you can get a conventional loan with as little as three percent down, an FHA loan with three and a half percent, or a VA loan with zero percent down. Knowing this can make homeownership a reality sooner than you may think.
A second myth is related to the first, which is that your down payment is all you need to buy a home. You also need to account for closing costs, including lender, attorney, and title company fees. You’ll also pay out of pocket for a home inspection and appraisal. While these fees vary, three percent in Illinois is usually enough to cover it.
A third myth is that selling your home as-is is always a good idea. While it’s definitely easier, it can also be costly. Making some basic, minor improvements will attract more buyers and can have a significant impact on your bottom line. Even if you sell as-is, failing to make some basic improvements prior to going on market can be a costly mistake.
A fourth myth is that renting is always throwing money away. If you aren’t planning on staying in the same place for at least three years, you could end up in a negative equity position due to the cost of buying and selling homes. Even if you sell a home for the same price you paid for it, you need to factor in transaction costs. If you aren’t ready to make at least a 3-year commitment to a location, you may be better off renting.
A fifth myth is that you don’t need a real estate agent. Not having an agent is like doing your own surgery. True story, I once removed an ingrown toenail when I was in college. Not my finest hour! It was pretty gnarly, and I’m lucky I didn’t need an amputation. Some transactions go smoothly, but more often than not, things get complicated, and an agent’s expertise can save you from costly mistakes. We know how to navigate the inevitable twists and turns so that you don’t end up paying more or getting less. Homes are too significant of an investment to roll the dice.
A sixth myth is that real estate always appreciates. Conservatively, homes tend to appreciate nationally at a rate of three percent, but markets fluctuate. 2008 saw significant losses and 2020 saw significant gains, and local markets don’t always follow the national trends. Homes do gain value over time, but it’s important to understand local market conditions before buying or selling.
Myth number seven is that it’s always a good idea to buy the worst home on the best street. While the higher value of neighboring homes may be good for your equity, if the home’s a complete mess, you may be getting in over your head. Location is important, but you need to consider the cost of renovations or if the home is too far gone. Sometimes, a move-in ready home in a less prestigious area is the smarter choice.
Myth number eight is that you can’t buy a home if you have student loans. Most lenders will factor in your payment rather than your overall student loan total, so as long as you have stable income and decent credit, you can often buy a home even if you have a large student loan balance.
And finally, our ninth myth is that all homes are a good investment. Not all homes will appreciate at the same rate. Homes on a busy street will always appreciate more slowly and take longer to sell. That doesn’t mean you should definitely avoid these. The upside is you often get a nicer home for less money. But you should know going in that your neighbors’ homes that aren’t on the busy street will always sell faster and for more money. The investment value of a home that has location liabilities will be less than those that don’t.
So there you have it: nine real estate myths. Buying or selling a home is complicated, and being able to separate fact from fiction will help you make better, more confident decisions. Let me know if I missed any myths, or if you’ve come across some of these yourself. Leave a note in the comments, and be sure to like this video, subscribe to my channel, and turn on notifications for more must-know real estate tips that can save you time and money. I’m Eric with Andersen Realty Group, a family-owned brokerage where we treat our clients like family.