Mortgage Myths That Stop People from Buying a Home Spring is commonly thought of as "real estate season" because a lot of people buy and sell homes in the spring and summer.
For most people, buying a house means getting a mortgage. To help you get started, we wanted to debunk some common mortgage myths and show you that it ’s not as scary and complicated as you might think. Here are five common myths, and the truth about mortgages!
Myth: You need 20% down to buy a home.
This one is false! Having a big down payment can help you reduce monthly costs, including helping you avoid private mortgage insurance, but you don’t need a 20% down payment to buy a home. There are a lot of loans you can get with just 3 - 5% down, and some loan programs allow you to put 0% down. Be sure to ask your Realtor and mortgage provider what programs you might qualify for that can help you save money!
Myth: A 30-year mortgage is always the best deal.
In reality, the “best” mortgage depends on your personal goals and financial situation. You can choose from a variety of mortgage types, including terms from 15 to 30 years with or without rate adjustments. What matters is how quickly you want to pay off the home, when you plan to move next and what you can afford. Your mortgage officer will be able to walk you through all the options out there.
Myth: A pre-qualification is all you need to go house hunting.
While you can start looking for a house with a mortgage pre-qualification, it’s not the same as a final approval. Most sellers (and their Realtors) will want to know that you are actually pre-approved for a mortgage, not just pre-qualified, which is an easier and less detailed process to get through. Remember to avoid job changes and big purchases while you’re looking for a house, even if you have a full pre-approval!
Myth: You need a nearly-perfect credit score to get a mortgage.
This is also not true. While people with higher credit scores may get more favorable terms, such as a lower interest rate, people with less-than-perfect credit scores can get mortgages, too. If you want those more favorable terms, you should spend some time working on your credit score before you apply for a mortgage. Work on reducing your debt, correcting credit report errors, using credit responsibly and paying all your bills on time!
Myth: Owning a home is always cheaper than renting.
While it’s nice to build up equity in a home, it’s not always cheaper than renting. But in addition to the regular mortgage payment, you need to factor in property taxes, insurance, maintenance, homeowners’ association fees, repairs and more. If you aren’t planning to stay in an area very long, renting might actually be a smarter move than buying a home. Talk to a mortgage loan officer about your timeline, goals and plans for the future when deciding whether to rent or buy.
Want to learn more about mortgages and the home-buying process? We have lots of resources for members like you, starting with no-obligation consultations with our mortgage loan officers. You can get all sorts of questions answered and learn a lot when you make an appointment with them — just call, click or stop by a branch.
In addition, we offer financial counseling for homebuyers who want to save up for a bigger down payment or raise their credit score through our partners at GreenPath Financial Wellness.
We wish you the best with your home search and we look forward to helping you in this phase of life!
