Top Mortgage Myths: What Buyers Need to Know

Ever thought you’re not ready to own your own home? Or you might have preconceived ideas about being fit to secure a home loan.

There are several common mortgage myths that can mislead homebuyers.

Here are some of the most frequent ones:

You Need a 20% Down Payment

Many people believe they must put down 20% to buy a home. While a larger down payment can lower monthly payments, many lenders and loan products allow for much smaller down payments – some as low as 5%.

You Must Have a Perfect Credit Score

While a higher credit score helps secure better rates, you don’t need a top score to get approved. Many lenders accept lower scores. There are other criteria that need to be met also, and a Credit Score is only one. A lower score might affect the interest rate you qualify for.

Pre-Qualification = Pre-Approval

Pre-qualification is a basic estimate based on self-reported financial information, while pre-approval is a more in-depth review that includes credit checks and verification. Pre-approval carries more weight when making an offer on a home.

To eliminate guesswork, I generally support a pre-qualification conversation followed by an offer to be subject to finance.

Renting is Always Cheaper Than Buying

While renting may seem cheaper in the short term, mortgage payments build equity over time, which I turn can be redeployed to catapult wealth creation.

Plus, fixed-rate mortgages ensure stable payments, whereas rent typically increases over time.

You Can’t Get a Mortgage with Other Debt

Lenders consider your debt-to-income ratio (DTI) as well as your ability to service your commitments rather than just the existence of other loans. If your income supports your monthly obligations, you can still qualify for a mortgage.

You Should Always Choose the 30-Year Fixed Mortgage

While a 30-year fixed-rate mortgage is common, other loan options (such as 20-year loans) may be better depending on your financial goals and how long you plan to stay in the home.

You Should Always Pay Off Your Mortgage Early

Paying off your mortgage early can save interest, but it may not always be the best financial move. If your mortgage rate is low, investing that money elsewhere could yield better returns.

You Should Always Wait for the “Perfect” Time to Buy

Waiting for lower home prices or interest rates can backfire. Markets are unpredictable, and waiting too long could mean missing out on opportunities. There is an opportunity cost to everything.

You Need a Long Employment History to Get Approved

Depending on your income source, policies differ from lender to lender and in some cases very short periods are required of less than a year of employment history. They also consider other factors like career stability and future earning potential.

Would you like me to clear up any other mortgage myths you’ve heard?

Reach out today!

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