Debunking three common real estate myths

When it comes to myths, most of us can easily dismiss tales of the Loch Ness Monster or alligators in the sewer as pure fiction. But in the world of real estate, some myths and misconceptions are so widespread that they can keep potential homebuyers on the sidelines, afraid to buy. But just like urban myths, real estate rumors are based on speculation rather than fact. Let’s set the record straight and debunk some of the most common myths circulating in the housing market today.

Myth #1: The housing market is about to crash
If you’ve followed real estate news, you’ve probably heard predictions of an imminent market crash several times over the past few years. However, unlike the 2008 crisis, today’s market is built on much stronger foundations. New laws were implemented after the 2008 market crash to strengthen the real estate market and reduce the risk of another collapse. Mortgages today are far more secure, with stricter lending practices in place. The conditions that led to the 2008 crash don’t exist in today’s market, making a repeat of that scenario highly unlikely.

Myth #2: No one is selling their homes
Housing inventory is tight in many markets throughout the US, but the idea that no one is selling their homes is a myth. While some homeowners may be holding onto their properties due to lower mortgage rates secured a few years ago, plenty of people still need to sell. Life events such as job relocations, growing families, downsizing, or simply wanting a change of space continue to drive home sales. Regardless of market conditions, there will always be people looking to sell their homes, and would-be homebuyers may need to be creative and look at alternate properties or areas in markets with low inventory.

Myth #3: You can’t lower your mortgage rate
One of the most pervasive myths in real estate is that you have no control over the mortgage rate you receive. While it’s true that market conditions influence rates, your financial health also plays a significant role. A recent report from Realtor.com looked into the steps you can take to secure a better rate and found some surprising data. Here’s what they found:

• Lower your loan-to-value ratio: When you save up a larger down payment that reduces your loan-to-value ratio to below 80%, your mortgage rate can be 18 basis points lower than for those with a loan-to-value ratio above 95%.
• Improve your credit score: Borrowers with a credit score above 750 often receive rates 39 basis points lower than those below 650. If you want to raise your credit score, make sure to pay your bills on time and reduce credit card balances.
• Reduce your debt-to-income ratio: Keeping your debt-to-income ratio below 30% can help you receive a potential reduction of 4.5 basis points compared to those with higher debt-to-income ratios.

Don’t let myths and misconceptions dictate when you’re ready to buy a home. By understanding the realities of the market and taking proactive steps to improve your financial standing, you can confidently navigate the housing market and secure the best possible mortgage rate. Book a consultation with your PRMI loan advisor today to start the prequalification loan process and see what type of mortgage and rate you could get!