There’s a lot of misinformation about mortgages, and if you’re thinking about buying a home, it can be hard to separate fact from fiction. Here, we’re busting the top 5 mortgage myths so you can feel confident in your home-buying journey!
Myth #1: You Need a 20% Down Payment
Many people believe that a 20% down payment is necessary to buy a home, but this isn’t the case. While a 20% down payment can help you avoid Private Mortgage Insurance (PMI), there are plenty of loan options available with much lower down payments, sometimes as low as 3% or 5%. Start saving for a down payment, but don’t be discouraged by this common myth!
Myth #2: Your Credit Score Needs to Be Perfect
While a higher credit score definitely helps when applying for a mortgage, it’s not true that you need perfect credit. Most lenders are willing to work with borrowers who have a credit score above 620, and some government-backed loans may even accept lower scores. It's more important to shop around for the best rates and find a loan that works with your credit profile.
Myth #3: Pre-Approval Means You're Guaranteed the Loan
Getting pre-approved for a mortgage is an important step, but it doesn’t guarantee that you’ll get the loan. A pre-approval letter shows that a lender is willing to lend you money based on your current financial situation, but it’s still subject to verification and changes in your finances. Always stay on top of your financial health and make sure nothing changes unexpectedly.
Myth #4: You Can’t Get a Mortgage If You Have Student Loans
Many potential homebuyers with student loans are afraid they won’t qualify for a mortgage, but this isn’t true! Lenders consider your debt-to-income ratio, but having student loans doesn’t automatically disqualify you. Life Planner’s Loan Tracking feature can help you manage both your student loans and mortgage to keep your finances in check.
Myth #5: The Lowest Interest Rate Is Always the Best Option
While a low interest rate is important, it’s not the only factor to consider when choosing a mortgage. The total cost of the loan, including fees, terms, and other costs, should be weighed as well. Life Planner’s Loan Amortization and Financial Reports tools are perfect for helping you track these details and make an informed decision.
Conclusion
Now that you know the truth behind these common mortgage myths, you’re better equipped to navigate the home-buying process. With a little preparation, some smart decision-making, and the right tools, you’ll be well on your way to owning your home!
If you’re ready to take control of your finances and make informed decisions about your mortgage, download the Life Planner app today! It’s packed with helpful features like Budgeting Tools, Savings Goal Tracking, Loan Tracking, and Financial Reports, all designed to help you manage your home-buying journey and beyond.
Start managing your mortgage, savings goals, and financial health today with Life Planner!