This article is inspired by this Forbes expose as well as this literary piece by Carl Joon. Call it a SpringsRealEstateNetwork.com specials of sorts. 😉
Unless you work as a real estate agent and a pro purchasing agent, home buying is hardly something you actually get used to. And that is exactly the case for most of us. Because of our lack of knowledge and expert experience on it subjects us to the most ridiculous yet most convincing myths about home buying, which in turn causes us to make the most common mistakes in home buying.
To help avoid this, you have to be informed and know how to tell fact from fiction. Here are 5 common home buying myths for starters:
- Myth number 1: You cannot have more than one real estate agent in Malaysia. Because a lot of purchasing agents let their clients sign an exclusivity contract, a lot of buyers think that this is the only way to go, that they cannot buy a house with another buying agent. But that is not your only option. Early on, inform your buying agent that you intend to hire the services of other agents. This way, you are freed of the exclusivity clause and instead be given a contract that will work for you and the agent both.
- Myth number 2: “You cannot get a mortgage to buy a 11 Mont Kiara unit with a bad credit history,” a negotiator once told me. Nonsense. While a clean and impeccable credit score will help you get lower interest rates and better deals on mortgage and home buying, it is not a necessity. Your less than ideal credit score will still allow you to get a mortgage, albeit with consequences including being listed at higher risk loans which, in turn, give you higher interest rates. You can get any piece of real estate you want… even if it’s 11 Mont Kiara!
- Myth number 3: You need a huge amount of money for down payment to buy a house. This was the norm about a decade or so ago, but mortgage lenders have now become more relaxed and tolerable. In replacement of a huge down payment, you only need to present a good proof of income or anything that would prove that you can afford a house. Depending on the lender, you may be required a small down payment (instead of the believed 20 per cent), or be totally rid of it. Presenting a huge down payment, however, still makes applying for a mortgage a whole lot easier.
- Myth number 4: Renting is better than buying. Sometimes, really, we’re better off with renting. This is especially true if you’re single and not looking to settle down soon. The monthly fees are relatively cheaper, you have less responsibilities, and you can save up more for your retirement when you’re just renting in your younger years. Buying, with the uncertainty of investments in the real estate and the market itself, can be inferior to renting at some point.
- Myth number 5: All forms of remodeling is a great investment and will raise your home’s market value in the future. Unfortunately, tons of home buyers believe this and end up buying a hopeless house with the hopes of remodeling it and therefore raising its market value. But a misplaced pool or an oversized backyard spa, even an ultra-modern kitchen that would make Gordon Ramsay jealous, could overturn the fates of a house that did not have a good projection right from the beginning.