Monday, October 31, 2011

Home-Buyer Confusion

With the plethora of information one can find on the internet about real estate, today’s home buyers tend to be fairly knowledgeable about the home-buying process. However, there are still a few points of confusion, a new survey by Zillow of 1,000 potential home buyers finds. 
Here are the five main areas of confusion the survey revealed: 
  1. Mortgage insurance: 41% of buyers think they will have to purchase private mortgage insurance, regardless of the amount of their downpayment. 
    • Reality: Buyers only need to purchase PMI if their downpayment is less than 20 percent of the home’s purchase price.
  2. Appraisals: 56% of the buyers said the purpose of the appraisal was to determine if a home was in good condition. 
    • Reality: That’s the purpose of a home inspection; an appraisal estimates fair market value. 
  3. Home owner’s insurance: 37% of home-buyers said that buying home owner’s insurance is optional. 
    • Reality: Lenders require home-buyers to purchase homeowner’s insurance. 
  4. Appreciation: About 42% of home buyers believe home values will appreciate by 7 percent a year. 
    • Reality: Historically, home values in a normal market appreciate by 2 to 5 percent in a year. 
  5. Ownership: 47% of home-buyers said a prospective buyer owns a home after the purchase contract is signed. 
    • Reality: The purchase and sales agreement is the beginning of the closing phase, but it can be a long process until they finally take ownership. 
Source: Zillow Inc.

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