4 housing money myths worth debunking right now
Sure, April is known for rain showers, funny jokes and the Masters Golf Tournament. But it's also National Financial Literacy Month, and The Title Resource Network team thinks that designation deserves its own spotlight.
After all, buying – or selling – a home is one of the largest financial decisions of people's lives. That's why debunking common real estate myths is important for all of us in the business. After all, we’re all here to make your real estate transactions smoother for all involved, and education is key in making things easier.
Myth: Going alone is a good way to save money. We’re not just sucking up to all our great Realtors with this one, we promise! One of the major headlines last year was the shift in how commissions are structured, particularly for buyers. Many still believe that going the FSBO (For Sale By Owner) route can lead to big savings, but we beg to differ. The truth is, a great Realtor can actually save you time, money, and a lot of stress when it comes to buying or selling a home.
Don't just take our word for it. Data from NAR shows that FSBO transactions are actually at an all-time low, and 88% of buyers used the expertise of a buyer’s agent. Just as important, the same figure (88% of those buyers) would recommend their agent to family and friends.
Myth: You need at least 20% for a down payment. This is one of the longest-running myths in real estate, and the one that professionals try to debunk the most. Here’s the truth: Saving to buy a house is key to any home journey, but you may not need as much as you think. In fact, the typical down payment for first-time buyers has ranged between 6 and 7% since 2018, and often-cited minimums are 3 and 3.5%. However, there are still initial expenses to consider, such as closing and moving costs, home maintenance needs, and utility and insurance fees. That's a fact.
Myth: PMI should be avoided at all costs. This untruth goes hand-in-hand with the 20% myth because if you have a smaller down payment, your monthly payment will include something called Private Mortgage Insurance. Some will tell you this fee is bad news, no matter the circumstance. However, in today's market, PMI shouldn't be considered a penalty if it gives you the ability to get home sooner rather than later. Think of it as a small monthly fee that gives you the financial flexibility to own a home sooner rather than later.
Myth: Student loan debt prevents young buyers from buying a home. Lenders focus on your debt-to-income ratio—not just how much of it you have. As long as your debt is manageable and your income is steady, many young buyers can still qualify for a mortgage. Our advice? Talk to a loan officer as soon as you’re comfortable with your financial situation. They can answer your questions and help you get pre-approved. One other truth to know? You can talk to these helpful professionals even before you pick a real estate agent.
Have other questions about buying - or selling - a home? Our TRN team is here to provide the answers as we guide you on the way home. Reach out to one of our offices anytime!
