Does the idea of committing to a 30-year mortgage and a six-figure price tag make you a little nervous? Good. It should be scary to buy something as sizable as a home.
And while a little caution is a good thing, an unreasonable amount of fear can keep prospective buyers on the sidelines of homeownership forever. So how can shoppers break through three common homeownership fears and bite the buying bullet?
Fear #1: How Do I Know if I’ll Really Like this House?
The panic starts to seep in quickly after (and sometimes during) a private showing: “Will the traffic drive me crazy? What about the commute? Will I hate that tile countertop? What are the neighbors like?”
Uncertainties abound when it comes to buying a home. So how can potential buyers look past the unknown and gain the courage to sign on the dotted line?
Conquer that fear: Research, research, research. Commit to learning as much about a home as possible. Here’s an assignment list to get you started:
- Ask your real estate agent about upcoming local developments (roads, schools, residential and commercial).
- Get a professional home inspection.
- Think about how big your home needs to be (both now and over the next 5 years).
- Visit the home at different times of day. How does the personality of the home/neighborhood change from morning to night?
- Walk through the neighborhood.
- Practice the commute.
- Visit local schools.
If something just doesn’t feel right, talk it over with your real estate agent. If you’ve partnered with an agent you trust, you should be able to work through any issues or concerns together. Maybe you’ll decide this just isn’t the house for you. And that’s okay. It’s better to delay a purchase than to make a big investment on a home that isn’t right for you and your family.
Fear #2: I’m Scared My Home’s Value Will Plummet.
The recent housing market meltdown has instilled a sense of caution in today’s buyers. We’ve all learned a valuable lesson: It’s not safe to assume that all homes will appreciate and produce a good return at resale.
Conquer that fear: One simple way to combat this fear is to consider the alternative: renting. Renting never produces a return at a lease’s end (unless you’re the landlord).
But a home purchase could also produce zero (or negative) return. For the best odds of good appreciation, ask your agent about local price trends. If you’re buying at the price peak, you’ll need to stay in your home longer to gain appreciation. Buying when prices are low is obviously less risky.
The bottom line? Learn all you can about local price trends, and be wary of buying when prices have recently skyrocketed. If those price increases can’t be supported over the long term, resale could likely result in a loss.
Fear #3: I Don’t Want to Face My Credit.
“Isn’t there a way to get a mortgage without running my credit report?” No.
Before a lender shells out funds, prospective buyers are placed under careful credit scrutiny. When it comes to a VA loan, lenders such as Veterans United Home Loans are looking for the following credit qualities:
- Minimum FICO score: 620
- Debt-to-income (DTI) ratio: 41 percent preferred (but it is possible to obtain a VA loan with a higher DTI)
- Residual income: Must meet local VA standards
- Previous bankruptcy: No Chapter 7 bankruptcy within the past 2 years or Chapter 13 bankruptcy within the past year
- Previous foreclosure/short sale: No foreclosure / short sale within the past 2 years
Conquer that fear: Getting a little nervous already? Stop that fear dead in its tracks. It’s time to (finally) fix your credit. Get a free copy of your credit report at AnnualCreditReport.com, and address any credit errors. Wait out a past foreclosure or bankruptcy, keep your credit balances reasonable, and always pay your bills on time.
Need more assistance? Don’t hesitate to reach out to a free (reputable) credit consulting service. Check with your local military base, credit union, university or housing authority for references to legitimate credit consulting services. Veterans and active-duty service members can also get free credit help through the Veterans United Lighthouse Program here.
Don’t Let Fear Decide Your Future
As Mae Jemison, the first African-American U.S. astronaut said, “It’s your place in the world; it’s your life. Go on and do all you can with it, and make it the life you want to live.”
In our daily lives, a little fear is a good thing. Caution helps us evaluate our options carefully and avoid rash decisions. But when that fear becomes all-consuming, it’s impossible to move forward. Chip away at that fear and watch a realm of possibilities unfold!