By Kevin Reskey
If you find yourself daydreaming about your ideal space or shopping online for a home during the pandemic, you’re not alone. A Bank of America study found that 89% of buyers are motivated to buy a home and half are actively looking at real estate listings.
The study also found that 83% of San Diegans say the biggest barrier to homeownership is expensive home prices and 58% say they will need assistance to save for a down payment. While a lot has changed over the last few months, including COVID-related challenges and rising home prices, many prospective homebuyers are not only still pursuing their home buying dreams, but some say they are actually accelerating their home purchase timeline.
While San Diego home inventory is low and prices are currently high, mortgage rates are at all-time lows, so this may be a good time for prospective homebuyers to start getting prepared as more homes come back on the market and demand is less pent up.
Regardless of your homeownership timeline, it’s always a good time to take the first steps toward preparing to be a homeowner. Unfortunately, some would-be buyers self-select out of homeownership, assuming they can’t afford a monthly mortgage payment or the upfront costs. Others simply don’t know where to start.
To help future buyers better understand what’s possible, let’s debunk some of the most common misconceptions.
Myth: There Is a Right Time to Buy
First-time homebuyers may be holding off for the “right time,” but there is no such thing because homebuying is such a personal decision. While there is no secret formula to assessing emotional and financial readiness, answering a few questions can help you determine how close you are to becoming a homeowner and equip you with the resources you need to move forward with your homebuying goals. After all, the more informed you are about the homebuying process, the better prepared you are to find the best options.
Myth: I Need to Put 20% Down
Many mistakenly believe you need a 20% down payment when, in reality, the median amount was 6% for first-time buyers in 2019. Still, 58% of prospective homebuyers in San Diego believe they will need assistance to save for a down payment. Luckily, there are lots of solutions to help hopeful buyers overcome this hurdle. Many lenders offer innovative, low-down payment options. Additionally, online tools enable buyers to search for down-payment and closing-cost assistance programs offered by state and local housing agencies, nonprofit groups and employers that can help make buying a home more affordable.
Myth: It’s Smarter to Rent Than to Buy
Another long-standing myth is that renting is more affordable than buying. However, a fixed monthly mortgage payment typically provides more stable housing costs than renting — and can sometimes be lower than your monthly rent. Homeownership also provides an important path to the creation of long-term wealth. Historically, homes deliver real appreciation over time. You may be able sell your home years later, or you can pass on the value your home has earned to your loved ones.
The returns of homeownership are not only financial. While buying a house is not an automatic ticket to the good life, research has shown an overwhelming 93% of homeowners say purchasing a home made them happier than renting. This happiness could be attributed to the fact that owning a home comes with the perk of being able to make your space exactly as you envision.
While homebuying may feel overwhelming, taking the first steps can help you understand your readiness for homeownership and ensure that you’re planning is on track. If you’re close to buying, a specialist can also review assistance programs you may be eligible for. With a little bit of guidance, the house of your dreams is within your reach.
Kevin Reskey is a Bank of America senior vice president and division executive for consumer lending. He oversees San Diego, Orange and Riverside counties along with Long Beach.
