A lot of the time, when someone mentions the possibility of buying or selling a home they are met with a ton of advice and opinions from friends and family about the process. Sometimes, that advice is based on old real estate myths more than facts, it is an idea that has been passed down through friends and family over the years. Unfortunately, we can all think of someone who had a fluke disappointing experience selling, a buyer who worked with a less-than-professional agent, or an acquaintance who sold a house with crazy financial terms 45 years ago. Now they’re convinced things must be the same these days and that these issues are going to reoccur. The fact of the matter is, like everything else real estate changes over time and is subject to the location and people you’re working with. I am going to break down the top four myths that I have heard most often to help give you a clearer and updated view of the process.
Myth #1 You Shouldn’t Buy When Interest Rates Are Rising.
Historically speaking, interest rates today are actually exceptionally low. In the 1980s Canadian interest rates hit an all-time high of 21%. Currently, we are sitting at an average mortgage rate of around 2.9%, which is incredible when you look at the lending trends over the last 40 years. With good credit, you can get a great mortgage rate despite the annual fluctuation we see with different lenders. There really is no better time to buy especially if you are a first-time buyer.
Myth #2 You Need A 20% Down Payment To Buy A House
In today’s market, 5% of the purchase price is the average down payment needed to purchase a home under $500,000. If the sale price is between $500,000 and $999,999 the down payment is 5% on the first $500,000 and 10% on any amount over $500,000 You will need to buy mortgage insurance for a down payment that is less than 20% to protect the lender. You are free to put down 20% to buy a home but it is not mandatory. If you did choose to put in a 20% down payment there are perks to that like avoiding buying mortgage insurance and of course, your monthly payment will be lower which is always a plus!
Myth #3 Investing In Real Estate Is For The Rich
It’s easy to see how this myth gained traction, as it does typically call for a substantial investment so most people assume it’s for people with money to throw around. In truth, there are so many ways for people to make money off of an income property these days. The simplest and quickest way I recommend to get a foot into the income property market is to purchase a duplex or triplex instead of a single-family home. You can live in one unit while renting out the other units. You can also use low-down-payment programs and investment partners to pool your money together to purchase your first investment property.
Myth #4 Omitting An Agent to Sell-By-Owner Will Save You Money
While all of the above points have been buyer-specific, it is important to mention this myth and discussion on the selling side. The idea of selling your home by yourself and avoiding paying commission can be a tempting one. However, it can cost you a lot more money in the long run. First of all, your home will probably sell for less, this is a simple fact. You do not have the networking connections or marketing ability of a professional agent to get the best price from the most suitable buyers. Buyers who look at the sale-by-owner market are looking for the lowest possible price on a home and they will only offer less than your listed price because they know you don’t have an agent to help guide you through the sale. You will have to invest your own time and money into the transaction, as well as marketing and selling your home. Most importantly though, what if something goes wrong? Are you prepared to handle the specific legal and financial issues that may arise? One missed clause can cost you thousands of dollars on your sale. Protect your financial interests and hire a professionally licensed agent like myself!