Real estate has a lot of moving parts and everyone seems to have an opinion on the best way to buy this or sell that. All that information floating around means it’s not always easy to find the right answers. But with so much money at stake, it’s important to separate fact from fiction. Just ask the experts.
Myth #1: Always choose the mortgage lender with the lowest rate
Truth: While a low rate might seem like the biggest factor in choosing a lender, there are other considerations. There are usually fees associated with a mortgage that can increase the overall cost and sometimes a higher rate with lower fees is a smarter choice. “I had a young couple that were doctors,” said Meinel. “They had tremendous expense with student loans. So they did an interest-only loan the first five years. For them, that was ideal.” Closing costs vary, but usually fall between two and five percent of the total cost of the home. They come from things like fees for running credit reports, surveys, lawyers, inspections and more. Some lenders even charge fees for giving a lower rate.
Myth #2: Buying is always better than renting
Truth: Not always. “There is no simple formula that says buying is better than renting,” said Suzan Kremer, associate broker for Douglas Elliman Real Estate. “Each individual scenario is based on specific needs and concerns.” Buying a home is great if you want to build equity, but it is a huge investment, especially on Long Island where housing prices are high. Some people may want to rent a home or apartment if they’re not sure where they want to settle, or if they’re just not ready for the investment of buying a home. “Renting in some ways can be more expensive than buying a home, condo or co-op, but some people feel the need to have cash on hand and remain liquid,” Kremer said. “Purchasing with all cash or even taking a mortgage and paying monthly charges may just cost you the same as a rental while you are building equity and gain tax advantages with your investment.”
Myth #3: You need a garage to sell a home
Truth: Some buyers prefer a garage, but not having one isn’t going to be a dealbreaker. Garages are definitely popular in places where on-street parking is restricted. Buyers of homes on main streets like having a garage.
Myth #4: A cash offer is always best
Truth: “You have to look at all the ingredients,” said Bob Moulton, CEO and founder of the Americana Mortgage Group. If a seller gets two identical offers, except one is cash and one is financing, then take the cash. But most offers won’t be identical and often those with a mortgage can offer more. “You also have closing date, subject to inspection, subject to appraisal,” Moulton said of the other moving parts in a bid. The seller’s wants and schedule should also play a big role in the decisions. The cash buyer may have to wait to sell his own home before he can close on the new one and there’s no way to predict when either of the closings will be.
Myth #5: Remodeling will always increase your home’s asking price
Truth: Turning outdated kitchens and bathrooms into modern and well-equipped spaces is always helpful, Meinel said, and can raise the price of the home as well as increasing the desirability. “If it’s a brand new kitchen with all granite countertops and stainless appliances,” said Meinel, “and the house I’m comparing it to has Formica counters and white appliances, it’s a $30,000 to $40,000 difference on the kitchen.” However, it’s not a guaranteed price increase. “My advice is usually to talk to your agent before deciding what improvements you’re going to do,” Paruolo said. “Some are wiser than others and you don’t want to over-improve your house for the neighborhood.”