Queens Homebuying Myths

In this week’s post we wanted to cover some common homebuying myths here in Queens NY. Some of them may seem relatable while others may not. Either way, the truth is that whenever you’re thinking of buying a property, some of these things may cross your mind and they are all definitely worth considering. That said, below is a breakdown of these common homebuying myths as well as our take on each one.

It’s cheaper to rent than own 

Fact:

Your monthly rent payments add up over the years, helping your landlord. For example, let’s say you’re renting a 2 bedroom apartment for $2,800/mo, that’s $33,600 paid to your landlord every year. But what about you? Rent prices can rise and be unpredictable, but with options like a fixed-rate mortgage, you’ll know your payments over the life of the loan, and that $33,500 would be going into your own property which raises your net worth by lowering the mortgage balance every month. In addition, you’ll build equity with homeownership so you can access those funds in the future if necessary. Once you have equity in your home you can tap into it for things like home improvements, paying for college, buy a new car, and more. Plus, owning your home means you can do things your way, not your landlord’s way.

Mortgage rates are too high to buy 

Fact:

Mortgage rates will always rise and fall, but you don’t have to take them at face value. There are several ways to offset rates, from paying lower rates upfront, negotiating rate buydowns, or refinancing later on when rates come back down. One thing is for certain, the US real estate market is very much like the US stock market over long periods of time, up and to the right. In other words, home prices tend to appreciate over time, and although the mortgage rate may be higher than you would like, the truth is that buying allows you to stop adding to your landlord’s asset column and start building your own. Mortgage rates fluctuate so once rates come down, you can refinance and bring your mortgage payment down. And you can always think about that old phrase that says “The best time to buy real estate is 20 years ago…. The second best time is now.”

Student loan or credit card debt is bad 

Fact:

Not all debt is bad. What matters more to lenders is your debt-to-income ratio. A debt-to-income ratio of 43% or less is preferable, while some programs will allow you to go as high as 50%. This means that you can have some debt and still be eligible to buy a home. One thing we always recommend is that if you have good credit, good income, and a down payment saved up, you should apply to get pre-approved just so that you can see what you are able to qualify for and what you would need to do in order to raise your approval amount, if desired.

You need perfect credit 

Fact:

You don’t need a perfect credit score, but you do need to show a history of responsible borrowing to your lender. There are several things you can do that will raise your rating, including: pay your bills on time, reduce your credit balances, don’t apply for credit often, and establish a credit history. Don’t let a low credit score hold you back. If you have a low credit score, speak with a local Realtor who has connections with mortgage lenders and mortgage brokers. There are a lot of programs out there so if you speak to a handful of mortgage professionals, you should be able to find someone that can approve you for a loan, and if they can’t then you can ask more questions to find out what you need to do to get approved in the future.

You need to save 20% for a down payment 

Fact:

You can buy a house with little or no cash, turning years from now into today. Mortgage companies offer a variety of low – and no – down payment loans and a wide range of down payment assistance programs (DPA) for conventional and FHA loans. The minimum down payment for an FHA loan is 3.5% and some programs like SONYMA allow as low as 2.5% down. Don’t let a small down payment hold you back, still worth getting pre-approved to see what you can qualify for 🙂 Hope this helps!