Demystifying Common Home Buying Misconceptions

Demystifying Common Home Buying Misconceptions

Home buying can be an exciting yet daunting process, especially for first-time buyers. The real estate industry is rife with jargon and complexities that can leave buyers feeling confused. In this blog post, I aim to shed light on some common misconceptions to help you navigate the home-buying journey with confidence.

Misconception 1: PMI Requirement Regardless of Down Payment

A staggering percentage of buyers believe that Private Mortgage Insurance (PMI) is mandatory, irrespective of their down payment amount. However, PMI is typically only required if the down payment is less than 20%. Lenders see lower down payments as higher risk, hence the need for insurance to protect against default.

Misconception 2: Appraisal Determines Home Condition

It's a common belief among buyers that the appraisal determines the condition of a home.  In reality, inspections, such as Contractor's Inspection or Pest Inspection, are conducted to assess the property's condition. The appraisal, paid for by the borrower, primarily serves to help the lender assess the reasonableness of the purchase price, not the property's condition.

Misconception 3: Homeowner's Insurance is Optional

Surprisingly, many home buyers think that Homeowner's Insurance is optional. However, lenders typically require Property Insurance to be in place before funding the loan and closing escrow. This ensures protection for the collateral against potential risks like fire damage.

Misconception 4: Ownership After Signing the Purchase Contract

Buyers mistakenly believe they own the home immediately after signing the purchase contract. However, ratifying the contract is just the beginning of the process. Escrow is opened to facilitate various steps, including inspections and financing before the property's ownership is legally transferred.


Navigating the complexities of the home-buying process can be challenging, especially with prevalent misconceptions. By debunking these myths, I hope to empower buyers to make informed decisions and embark on their home-buying journey with clarity and confidence.

Do you have a question about the home purchasing process, particularly in San Francisco? I'm here to help!


Oliver Burgelman

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