Last Updated on March 5, 2024
If you’ve been thinking about a move soon, get ready for the 2024 real estate market as we dispel the biggest home buying myths.
This market is fast-paced and you’ll never find a home
If you’re searching for a home right now or thinking about moving in that direction in the coming months, chances are someone’s told you that the market is very challenging right now. And while that’s true—there are certainly challenges in every market, and this one is no exception—that doesn’t mean you won’t be able to find a home you love.
Here’s the good news for 2024: Mortgage rates are moving downward compared to this time last year and are expected to continue to decline as the year progresses. The change in interest rates is expected to motivate sellers who have been sitting on the sidelines waiting to list their home, and as a result, we’re predicting that there will be more inventory on the market this year.
The first step in the process is to look for homes
Many soon-to-be home buyers think the first step is looking for homes online or driving through neighborhoods they’re considering, when in reality, ideally, the first step in the process starts with finding out how much you can afford, rather than shopping for homes.
Going ahead and getting pre-approved is the best and only way to know exactly what you can afford. A pre-approval is a full mortgage loan commitment, subject to a fully executed purchase contract and the completion of an appraisal. It scrutinizes every aspect of your credit worthiness and is reviewed by an underwriter, and allows you to be ultra-competitive in a low-inventory market.
Once you’re fully pre-approved, you’ll have confidence to shop for homes comfortably in your budget.
You need 20% down
Of course, a 20% down payment is great for avoiding private mortgage insurance and lowering your overall monthly mortgage cost, but when you’re buying a home for the first time, this can often be a roadblock for buyers. Luckily for first time buyers, loan options are plentiful and many require as little as 3% down, and some even require as little as 0% down.
Veterans have access to 0% down loans through The U.S. Department of Veterans Affairs. Conventional loans backed by Freddie Mac and Fannie Mae allow qualified buyers to purchase a home with as little as 3 percent down and FHA loans allow first time buyers to buy with as little as 3.5 percent down.
You can read about more down payment options and opportunities to save, here.
Home inspections are not necessary
Unfortunately, many would-be buyers think of home inspections like a recommendation, rather than a requirement to purchase a home. While there’s no rule or law saying you have to have a home inspection, it’s not wise to skip this important step in the process.
Forgoing the home inspection means you forfeit the opportunity to back out of the contract if there is significant damage and costly repairs to be made to the property, have justification when making repair requests, and learn about any illegal additions or renovations that go against code, just to name a few good reasons not to abandon the process.
Buying new construction and think you can waive an inspection? Think again: even new homes can have significant issues and should always be inspected.
What about when you’re trying to win a bidding war between several other hungry buyers, should you offer to pass on an inspection then? Of course not! Yes, a home inspection is not a home warranty, but it does go a long way towards protecting the buyer and you absolutely cannot afford to skip this step.
Related reading: 5 mistakes buyers make during home inspections
The only up-front cost is the down payment
Besides covering your down payment, you’ll need to factor in closing costs. Closing costs are between 2 and 5% of your home’s total purchase price and cover things like title fees, pre-paids and escrow, lender fees and property-related fees.
Because we’re on the subject of budget, don’t forget to factor in the cost of homeownership. Besides being responsible for your mortgage, it’s a good idea to save for the cost of maintaining your home, too. We recommend setting aside 1-2% of the home’s purchase price so that you can be prepared for unexpected expenses and save for big-ticket items like replacing your roof, a/c, hot water heater, etc.
You shouldn’t worry about the schools around the home you’re considering
Even if you don’t plan to have children or are years away from your children being school-aged, it’s always a good idea to consider the school district when you decide on a home to buy. A highly rated school is a direct reflection of the neighborhood it serves, which means your home value will continue to appreciate at better-than-average returns. The same can be said about schools with less-than-favorable ratings. Remember, even if the school zones don’t matter to you right now, it’s always wise to weigh the pros and cons of buying in a great or not-so-great school zone.
Keep reading: Is it worth it to buy a home in the school district of your choice?
