With over three decades of experience in the real estate industry, I’ve come across numerous misconceptions about mortgages.
Let’s set the record straight on some of the most prevalent myths:
- Myth: A perfect credit score is mandatory for a mortgage.
Truth: Good credit does improve your chances, but it’s not the sole criterion. Lenders look at multiple factors. If you have blemishes on your credit, you might still secure a mortgage—though possibly with higher interest or a larger down payment.
- Myth: A 20% down payment is the absolute minimum.
Truth: A 20% down payment can indeed bypass private mortgage insurance (PMI), but there are other options. Various mortgage programs, including FHA, VA, and USDA loans, often require lower down payments.
- Myth: The 30-year fixed-rate mortgage is always the best.
Truth: This mortgage type is commonly chosen, but it’s not one-size-fits-all. Depending on your financial standing and future objectives, alternative mortgages, like the 15-year fixed-rate or adjustable-rate mortgages, might be more suitable.
- Myth: Opt for the lender offering the lowest interest rate.
Truth: Although rates matter, they shouldn’t be your sole focus. Take into account the lender’s fees, the quality of their customer service, and their overall reputation in the industry.
- Myth: Refinancing is a guaranteed money-saver.
Truth: While refinancing can be beneficial, it’s not universally advantageous. Always weigh the refinancing costs, such as closing costs and fees, against potential long-term savings.
To make the best mortgage decisions, thorough research and consultations with mortgage experts are essential. If you need recommendations, we’re connected with many seasoned professionals in the industry. Don’t hesitate to reach out!