The 2020 Millennial Home Buyer Report shows how this generation is not really any different from previous ones when it comes to homeownership goals:

“The majority of millennials not only want to own a home, but 84% of millennials in 2019 considered it a major part of the American Dream.”

Unfortunately, the myths surrounding the barriers to homeownership – especially those related to down payments and FICO® scores – might be keeping many buyers out of the arena. The piece also reveals:

“Millennials have to navigate a lot of obstacles to be able to own a home. According to our 2020 survey, saving for a down payment is the biggest barrier for 50% of millennials.”

Millennial or not, unpacking two of the biggest myths that may be standing in the way of homeownership among all generations is a great place to start the debunking process.

Myth #1: “I Need a 20% Down Payment”

Many buyers often overestimate what they need to qualify for a home loan. According to the same article:

“A down payment of 20% for a home of that price [$210,000] would be about $42,000; only about 30% of the millennials in our survey have enough in savings to cover that, not to mention the additional closing costs.”

While many potential buyers still think they need to put at least 20% down for the home of their dreams, they often don’t realize how many assistance programs are available with as little as 3% down. With a bit of research, many renters may be able to enter the housing market sooner than they ever imagined.

Myth #2: “I Need a 780 FICO® Score or Higher”

In addition to down payments, buyers are also often confused about the FICO® score it takes to qualify for a mortgage, believing they need a credit score of 780 or higher.

Ellie Mae’s latest Origination Insight Report, which focuses on recently closed (approved) loans, shows the truth is, over 50% of approved loans were granted with a FICO® score below 750 (see graph below):

Even today, many of the myths of the homebuying process are unfortunately keeping plenty of motivated buyers on the sidelines. In reality, it really doesn’t have to be that way.

If you’re thinking of buying a home, you may have more options than you think. Call me and let me help you to determine your next steps.

That being said, there are no dumb questions to ask a real estate agent.

Home buying seems simple enough: Find a house you like that’s close to work or school, tell someone you want to buy it, and move in.

But there’s more to it than that. You’ll have to find and get approved by a lender who will let you borrow a few hundred thousand dollars, lock in a mortgage rate, figure out how much house you can afford, put in an offer that will entice the seller, get an inspection and an appraisal, pay closing costs and sign a whole bunch of paperwork.

Phew! We need a break just thinking about all the questions to ask when buying a house.

Your real estate agent can help you understand the process. But if you don’t ask questions or get your agent to clarify something you don’t understand, they’re not going to know you’re confused. And you won’t learn anything.

“There are no such things as stupid questions,” says REALTOR® Ryan Fitzgerald in Raleigh, N.C. “If you have a question, ask it, no matter how foolish it sounds in your own head.” 

Don’t be afraid. Ask away. You’re making one of the biggest financial transactions of your life, so it’s a good idea to tap into your agent’s expertise.

Here are some questions to ask a real estate agent when buying a house.

1. How Many Clients Have You Helped Purchase Homes?

Before you pick a real estate professional, ask them how many clients they’ve worked with to find a home. Your real estate agent is supposed to be an expert, so one with a lot of experience will be a big help to a newbie home buyer like you.

That’s not to say a newly licensed agent can’t be a good one. But agents learn on the job. The more sales they’ve completed, and the more people they’ve helped buy a home, the more wisdom they have to share with you.

2. How Old Is The HVAC, Water Heater, And Roof Of This Home?

It’s easy to be dazzled by 12-foot ceilings, crown molding, and other aesthetic features, but you need to pay attention to the nuts and bolts of the house. We’re talking the unsexy stuff like the HVAC system, water heater, roof, electrical system, and plumbing.

“Knowing the age and condition of the major items will help yougauge how much your home could potentially cost once you move in,”Fitzgerald says. “The older the home, the more likely you are to havehigher maintenance costs.”

These items could have more impact on a home’s value than quartz countertops or hardwood floors, because it’s expensive when they malfunction. A leaking hot water heater can do thousands of dollars of damage. And replacing an aging HVAC system can start at more than $5,000, putting it in the major expense category.

3. What If The Home Inspection Reveals Major Issues?

We won’t lie: The home inspection is one of the most nerve-wracking days of the homebuying process. It’s when you find out about every wart on the place you fell in love with at the showing. 

Most of the time the inspection goes as expected. But if you aren’t expecting a major issue and the inspector discovers something awful like a rusting sewer main or walls full of termites, it can be panic attack time.

Breathe. “What should I do when the inspector has bad news?” is one of the most common questions to ask when buying a house. Talk to your agent.

Your agent can calm you down so you can plan your next move, whether it’s “Let’s kiss this money pit of a house goodbye” or “Let’s negotiate with the seller and get those repairs done so you can close on time.” 

4. What Happens If The Appraisal Comes Back Low? 

In competitive markets where there are more buyers than sellers,it’s possible to end up in a bidding war over a house. This can drive the salesprice higher than the appraised value of the home. Lenders balk when the priceis higher than the value, and this can jam up the deal.

Ask your agent what you should do if the appraisal comes in low. An experienced agent will have been in the situation before and have good advice. You’ll have a couple of options, including ordering a second appraisal, covering the difference in cash, or walking away from the deal. 

No matter what happens, keep your cool. Just because theappraisal is low doesn’t mean the deal will fall through. 

“When things don’t go as expected, it’s important to remain level-headed. You never want to allow your emotions to be too up or too down when buying a home,” Fitzgerald says.

5. What Do We Need To Do To Prepare For Closing?

Closing day is essentially the transfer of ownership, but it’s not just a formality. It needs to go well. This is when you sign the final paperwork and get the keys to the house.

One of the most important questions to ask a real estate agent is exactly what you need to bring for the big day. You’ll probably need your ID, a check for the closing costs, and proof of homeowner’s insurance.

Asking in advance will keep you organized and help your first big real estate transaction run smoothly. You don’t want to get there and realize you forgot a key piece of paperwork that keeps the deal from closing. Fewer things are as disappointing than not going home from a closing with keys to your new house.

So ask questions. Knowledge is power, so there are no silly questions to ask when buying a house.

Source: Keeping Matters Current