Thinking about buying your first home? Having doubts about your decision to do so?
Your gut feelings are pointing you in the right direction. If every first-time homebuyer a had the same level of skepticism as you do, then there would be very few people making silly home buying mistakes. But be careful not to go down the rabbit hole of skepticism. You don’t want to miss out on an opportunity to finally move in your own home. This post is intended to share with you some common misconceptions about buying your first home.
Here are the 4 common misconceptions about buying your first home
1) Buying a home is not worth it
Unless you are a seasoned investor, with years of home buying/selling experience under your belt, you shouldn’t dream of doubling your money a few years after purchase. I assume you are buying by first keeping your family and their well being in mind. So, until they have a good nourishing home to stay in for years to come by, buying a home is always worth it. Plus, you can always sell it off in the future when the prices go up.
2) Renting is better than owning
Similar to the first point, this misconception too arises out of being overly competitive; when you need to. A home buyer indeed has to bear on his/her shoulders, additional expenses like property tax, insurance, repair, and maintenance. But in the long run, if the total amount you invest in buying a home is going to be less or even equal to renting the same house, then you have done a great job.
3) There are no tax benefits for a first-time homebuyer
Indeed, the tax benefit program for first time home buyers is no longer in operation. The new government has discontinued the program. Although there are still some ways a first time home buyer can expect to get some tax credits. Some states still allow you to tax deductions on the interest of your mortgage payments. According to Investopedia, Illinois, Ohio, and Washington are some states that offer tax credits.
4) You can’t buy a home without good credit
Have a low credit score? Still, want to go ahead and buy your dream home?
One easy way to get your mortgage approved– with bad credit– is to accept paying a high-interest rate. Most lenders don’t mind giving you the money if it is going to double their profits. However, I assume you are looking to buy a house at a low or decent interest rate while having a bad credit history.
Federal Housing Administration (FHA) Loan and Veteran’s Administration(VA) loans(for military veterans) are two best mortgage options for first time home buyers with bad credit. FHA loans are insured are Federal Housing Administration(FHA) and are designed specifically for people with low income. While VA loans are for those who have or are serving in the military. Both types of mortgages accept candidates with a credit score of around 600-620.
I hope the above post helped clear some of your doubts about buying a home for the first time. The crux of the matter is, as long as you and your family are planning to be the primary resident for about 6-8 years, buying a home is always going to be a good investment.