10 Brooklyn Homeownership Misunderstandings

Confused couple learning about Brooklyn homeownership misunderstandings.

There are many misunderstandings about Brooklyn homeownership that I have heard in my 30+ years of experience. I continue to listen to some of the same myths from homeowners and homebuyers. 

Today I discuss ten misunderstandings that I repeatedly hear about Brooklyn homeownership.

1. Renters don’t have to pay taxes and insurance. 

Although a renter does not directly pay these expenses to the governing bodies and insurance companies, the landlord will consider them in his rent calculation. When a landlord calculates the amount they will charge for rent, they look at several different factors. The home’s current market value is a top consideration. A landlord will also look at what the current local rent is for a similar property. They will also use their expenses as a factor in the calculation. These expenses could include the mortgage payment, taxes, insurance, HOA fees, maintenance costs, and property management costs. 

All renters need to obtain renters insurance. Renters insurance will cover the cost of your belongings should something happen in the home. Getting renters insurance may be a condition in your lease. Read your lease carefully. Protect yourself with renters insurance.

2. You only need a down payment to buy a home.

There are more costs to purchasing a home than just the down payment. You will need to cover expenses such as home inspections, pest inspections, and lender closings costs. Your lender can provide you with an estimate of what the closing costs would add up to when you obtain a pre-approval. Remember, this is just an estimate, and they can vary depending on municipal taxes, homeowners associations, and other factors. 

You must understand all the costs associated with a home purchase before you write an offer on any home.

3. If I have a mortgage pre-approval, I can afford the home.

Investment experts recommend that you do not spend more than 30% of your gross monthly income on a mortgage payment. Your lender may approve you for much more than that when they calculate your current income and expenses. Consider your lifestyle when deciding home much you want to invest monthly in your home. Suppose you like to go on vacations, eat out frequently, or have another big financial investment goal. In that case,l, you should not spend the maximum amount your lender will approve if you have other financial goals in addition to Brooklyn homeownership.

4. You need to put 20% down to purchase a home.

Ideally, you would want to put as large a down payment as possible when you purchase a home. Not only will it lower your monthly mortgage payment, but it will also build your equity quicker. However, many mortgage loan programs do not require a 20% down payment. If you are a veteran, you may qualify for a VA loan with no downpayment requirement. An FHA mortgage downpayment could be as low as 3.5%. Numerous other loan programs offer low down payments. Check with your lender to see what they have available. They can also discuss the advantages of each loan program with you. 

5. You need perfect credit to obtain a loan.

There are many different loan programs, and there are different levels of acceptable credit score per loan program. Credit scores run from 300 – 850. You don’t need a perfect 850 score to obtain a mortgage because there are different loan programs for varying credit score levels. If your credit score is below 580, you may need to work on credit repair before purchasing a home. It doesn’t take as long as you think to improve your credit. Working with a good credit repair professional will help you boost your score and get you into a home of your own sooner than you think possible. A mortgage lender should be able to help you find a reputable credit repair professional.

6. Having a home inspection will guarantee you won’t have problems with your home.

I wish this weren’t a misunderstanding, but it is. A home inspector does the most thorough inspection that they can. However, there are components of the home they can not examine with a typical home inspection. They can not see everything from their visual inspection. Only Superman has x-ray vision. Most home inspectors do a great job evaluating a home, but there may be unforeseen issues they may not be able to detect in a typical home inspection. That doesn’t mean you will have any problems with your home purchase. However, you need to discuss with your real estate agent and home inspector what they can and can not evaluate. If you are purchasing an existing home, you can expect something will arise during your ownership that will require maintenance or repair.

7. A newly constructed home is maintenance-free.

Maintenance requirements for a new home is a misunderstanding that takes many new homeowners by surprise. Owning a home means you will always be required to maintain the house. Unless you have purchased in a co-op where maintenance is part of the package, expect to invest time and money on maintaining your home. Better Homes and Gardens put together this comprehensive home maintenance checklist that is an excellent guide for homeowners. It is important to keep up with regular maintenance to prevent a significant expense for deferred maintenance of your home components.

8. All home improvements add value.

First of all, don’t expect any home improvement to bring back dollar for dollar of the cost. The return on investment varies from region to region. ROI can depend on the local area, weather, and cost of living. You can find many resources to help you calculate what you can expect. Another consideration when deciding on a home improvement is how long you intend to live in the home. Sometimes you just want to add an improvement for your use and enjoyment even if it doesn’t add additional value to the house. Here is a link to a recent blog post on my website addressing the possibility of over-improving your Brooklyn home. You will find some good food for thought as you decide on home improvements.

9. You can do whatever you want on your property when you own a home.

Local municipality regulations, zoning requirements, and homeowner associations can dictate what you can and can not do on your property. Before finalizing the purchase of a home that is part of a homeowner’s association, be sure to get a copy of the governing documents to review. In these documents, you will find their by-laws, rules and regulations, and policies. It is also wise to check the municipality regulations and zoning requirements, particularly if you purchase the property with a specific use in mind. Don’t rely on someone, including your real estate agent, to provide that information to you. Do your due diligence and ask questions. This is not an area where it is better to ask for forgiveness than permission. 

10. Home values always appreciate.

Many factors determine a home’s appreciation. It isn’t easy to predict what will happen in any local real estate market. But you need to know that homes do not always appreciate. One of the main factors is the location of the house. If the home is in a desirable area, you can expect appreciation. If the area is declining, it can have a negative effect. Be wary of buying the most expensive home in any neighborhood, especially when the houses surrounding the home for sale are smaller and less expensive. The economy in the area will also affect the rate of appreciation. If the economy is declining, you probably will not experience an increased appreciation of the home. Also, local development can play a factor in a home’s appreciation. Commercial construction in an area can either be a boost or a detriment to the rate of appreciation.

I hope these explanations clear up a few questions you may have about Brooklyn homeownership. Doing your homework is crucial when you are purchasing a home. And hiring an experienced real estate professional who is working on your behalf is priceless.

Contact me, Charles D’Alessandro, your Brooklyn Real Estate Agent with Fillmore Real Estate. As a Brooklyn real estate agent with over 30 years of experience, I  have helped many home buyers and sellers uncover the answers to their questions.

In the event our office is shut down, we are always committed to your safety during the COVID-19 health crisis in compliance with the State of New York public health policies. I can be reached by phone at (718) 253-9500 ext. 1901 or by email at charlesthebrookly[email protected].

Charles D'Allesandro

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