Common Mortgage Myths and Misconceptions

The world of mortgages can be confusing and full of misinformation. There are many common mortgage myths and misconceptions that can lead people to make poor financial decisions or miss out on opportunities to save money. In this article, we'll take a closer look at some of the most prevalent mortgage myths and misconceptions and provide the facts to help you make informed decisions about your mortgage.

Myth 1: You need a 20% down payment to buy a home One of the most common mortgage myths is that you need a 20% down payment to buy a home. While a 20% down payment is ideal, it's not a requirement. There are many programs available that allow you to buy a home with a much smaller down payment. For example, FHA loans allow you to buy a home with a down payment as low as 3.5%.

Myth 2: You need perfect credit to get a mortgage Another common myth is that you need perfect credit to get a mortgage. While having good credit can make it easier to secure a loan and get a better interest rate, it's not a requirement. There are many programs available for people with less-than-perfect credit, and even people with a bankruptcy or foreclosure in their past may be able to qualify for a mortgage.

Myth 3: Fixed-rate mortgages are always better than adjustable-rate mortgages Fixed-rate mortgages are popular because they provide stability and predictability, but they may not be the best choice for everyone. Adjustable-rate mortgages (ARMs) can offer lower initial rates and smaller monthly payments, making them a good choice for people who plan to sell their home within a few years. It's important to consider your specific financial situation and goals when deciding between a fixed-rate and adjustable-rate mortgage.

Myth 4: You can't refinance if you have a low credit score While having a low credit score can make it more difficult to refinance, it's not impossible. There are programs available that allow you to refinance even if you have a low credit score. The key is to work with a lender who specializes in helping people with less-than-perfect credit.

Myth 5: You can't deduct mortgage interest on your taxes if you have a low income Another common myth is that you can't deduct mortgage interest on your taxes if you have a low income. In reality, the mortgage interest deduction is based on the amount of interest you pay, not your income. If you itemize your deductions, you can deduct the mortgage interest you pay, regardless of your income.

Myth 6: You should always make the minimum monthly payment While making the minimum monthly payment can help you save money in the short term, it can end up costing you more in the long run. When you make the minimum monthly payment, you're only paying the interest on your loan, not the principal. This means that you'll end up paying more in interest over the life of the loan.

In conclusion, it's important to be aware of the many common mortgage myths and misconceptions that can impact your financial decisions. By understanding the facts, you can make informed decisions about your mortgage and achieve your financial goals. It's always a good idea to work with a knowledgeable and experienced lender who can provide you with accurate information and guidance.

If you're ready to start the home buying process, click the Apply Now button below!

Apply Now

Aaron Clark - NMLS 1770738

"The Mortgage Dude"

Senior Mortgage Lender

Motto Mortgage Charged

Co. NMLS 2263902