As a real estate broker that helps clients make some of the biggest financial decisions in their life education is paramount. Being active in the field day in and out I see it all. It is this level of experience my clients have come to lean on as they navigate through the intricate world of home ownership, whether that be acquiring or moving residential real estate in Chicago.
So what about all the information out there on the internet, readily accessible to consumers? Simply put, it's confusing. Articles are biased and statistics are construed. We all know the difference between an average and median and how wildly these figures can vary. Real Estate is simply too complex, unique, and hyper-local to fit into such large buckets. That's why partnering with a competent broker that can align your goals with the market has become ever more important in our competitive markets.
So without further ado, the most common buyer misconceptions I come across:
1. Banks require 20% down payment for purchasing real estate.
Back in the day, maybe. Lending requirements these days allow for down payments as low as 3-5% down with competitive interest rates. Even if you have it, there may be better ways to invest it. Ask me how.
2. Worrying about a mortgage pre-approval after finding a house.
If you value your time and emotional well being I would encourage you to consider otherwise. Simple mortgage calculators don't take into account all the unique variables of both the borrower and property. Don't fall in love just to get your heart broken. Take things slow and steady by strategically planning. The process can be stressful enough as it is, no need to add extra layers. Need a rock star lender? Ask me.
3. Credit score is too low.
How do you know what's too low? Different credit bureaus report in different ways. Different banks have different guidelines. You have to take a holistic approach when thinking about this. And if your score really is negatively impacting your livelihood, do something about it. There are plenty of programs and ways to improve your report. Ask me how.
4. Planning to relocate in 3-5 years, real estate is not a sensible investment.
This one is tricky. In some cases, you might be right. But real estate is about seizing opportunities. Finding a fixer-upper at a depressed price is a surefire way to build some wealth over just a few years. Even if the market only improves marginally you still end up ahead of the game. The alternative? Throw every penny at rent with 0% chance of seeing any of it again.
5. The market is too expensive and/or competitive right now.
Lets not forget that competition is a good thing and vital for a healthy marketplace. Property values have rebounded since the recession but there is always room for ebb and flow. Having been in multiple offer situations myself I understand the fear. While it can be discouraging to lose out on a dream home the freedom and flexibility of home ownership is worth the fight. Don't give up in a time with historically low interest rates. Partner with a broker that can be creative into outsmarting other bidding buyers. Ask me how my clients have had success with this.
6. Whoever can offer the lowest interest rate wins my business.
Tread carefully here as you often get what you pay for. Professional reputation is not only important for securing the deal but for making sure it sees the finish line. I have had buyers adamantly switch lenders for a marginal difference in interest rate. More than one of those turned into frustration for my buyers as they were strung along with an over-complicated process, sometimes to the point where the deal risks falling apart. With the new TRID requirements, make sure you are borrowing from someone that has a track record of success.