As the real estate market continues to bounce back, many homebuyers are making the decision to step into the market. While the anxiety surrounding the downturn has left many buyers sitting on the sidelines, overcoming the remaining homebuyer myths and imsconceptions is a very real challenge.
Between local news and the overwhelming availability of online information, determining what is fact and what is fiction can be very difficult.
I sat down with Karlton Utter, the Director of Learning Technologies and Solutions for Better Homes and Gardens® Real Estate to put three of the top homebuyer misconceptions about the real estate market to rest.
Homebuyer Myths vs Reality
1. Lending Restrictions
Rebekah: Many consumers worry that banks are not lending the way they used to and that tighter rules are keeping many buyers out of the market. Is this a myth or reality?
Karlton: This is a myth. Almost 5 million homes sold across the United States in 2012 and while not everyone needed a mortgage, the majority did. If buyers have an acceptable credit score, three lines of credit or more and a two year job history, chances are they will be able get a loan. You need to help them overcome the fear of rejection which holds many back.
2. Credit Issues
Rebekah: The concern that tops the list for many buyers is credit. There is the thought that bad credit will keep them from qualifying for a new home. If your credit score isn’t perfect, is there a way to buy a home?
Karlton: The reality is that this is a potential problem, but the good news is there are solutions. A few ways to monitor and prepare credit for a home purchase:
- Check your credit score once per quarter and develop a plan to rebuild after any issues e.g . short sale, foreclosure, late payments
- Keep a small, manageable balance on all lines of credit and make payments on time
- If you have no credit, try to get a credit card that you use and pay off every month
- Do not charge more than half of your limit because that will lower your credit score
- Do not close any credit. Keep all available lines open.
- Do not make any large purchase or open new lines of credit prior to pre-qualifying for a new home
3. Buy Now or Wait
Rebekah: When it comes to timing, many buyers are torn over whether or not now is the right time to buy. What would you say to the buyer sitting on the fence right now?
Karlton: The reality is that now is an excellent time to buy a home. Year-over-year increases in home sales and home prices across the country along with low interest rates makes now a perfect opportunity for homebuyers.
Remember, this is a significant purchase for your clients and this home is a place that they will raise their family. It is a serious investment and somewhere that they plan to stay in for many years, not fix and flip.
Help them consider the realities of the high cost of waiting for the bottom of the market:
- If rates increase even slightly, the cost of a home over the life of the loan jumps dramatically. So even if prices remain stable but interest rates rise, a buyer looking to purchase a home could pay substantially more for the same home.
What are the myths you are overcoming with your buyers in today’s market? We’d love to hear from you in the comments below!
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