Everyone knows that buying a home today is very different than in the 1950’s or even in the 2007. But the truth is, buying today is completely different. What was known for a fact in 2003 is no longer valid. So, in case you plan buying a home, regardless if it is a house or an apartment, you should be aware of the realities today. Below in are the five most commonly spread myths about buying a home.
1. 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 5% or 10% for a down payment at various financial services companies. There are even some property developers who offer installment plans without mortgages. 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, providing you have decided to get indebted for a few decades ahead.
2. You need a credit history to apply for a mortgage loan
Getting a loan today is actually not so difficult. Besides, how many people have a good credit history these days? Banks will give you a home loan even though you have some dings in your previous credit history. Lenders are in business for the same reasons everyone else is.
3. 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 dollars more if you choose the fixed rate. You need to seek for professional advice and do the mathematics yourself, before deciding on a loan deal. It is important to consider your age, especially if you are in the UAE where most people are expatriates and the the residence visas are limited to their abilities to work in most of the cases.
4. Avoid real estate brokers to save money
Real estate agents get 5% commission and the amount is paid by the sellers usually. However, this commission will reflect in the total price of the property you are buying. In addition, your agent will also need a percentage. So, many people believe if they buy directly from the the real estate developer, they won’t have to pay this extra commission, or at least not all of it. Well, experts say, this just never happens.
5. 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 will do if you find a better job in another country? There are many things to consider before buying, 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.
