6 Mortgage Myths Homebuyers Still Believe

If you’re successful the marketplace for a location loan, here’s the bully news: Mortgage rates are falling acknowledgment to a mates of caller Federal Reserve complaint cuts, according to Freddie Mac — and they mightiness propulsion adjacent little successful the months ahead.

Before heading to the nearest indebtedness officer, though, you should beryllium alert of communal misconceptions astir mortgages. Below are six owe myths galore homebuyers inactive believe, according to experts.

Also present are owe hacks that really work.

There’s a large quality betwixt being pre-qualified and pre-approved for a owe loan. With the former, the exertion hasn’t been submitted to underwriting for review, according to Kylee Gladwell, owe indebtedness serviceman astatine Wasatch Peaks Credit Union.

But erstwhile you get pre-approved, your record has been some submitted to underwriting and approved. This tin simplify the process considerably.

“If you are capable to get a pre-approval done, that would beryllium the champion option,” Gladwell said.

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While having an fantabulous recognition people (800 oregon higher) tin assistance you get the champion indebtedness terms, it’s not a request for getting a mortgage. You volition person a hard clip getting approved with a mediocre people (typically, 579 oregon less, according to Experian), but thing supra that mightiness enactment you successful spot for a loan.

Lenders successful 2025 are focused connected “total fiscal wellness — not conscionable a recognition score,” said Karl Benjamin, enforcement vice president of 3rd enactment origination astatine Cardinal Financial.

If your fund requires a debased monthly payment, past a 30-year fixed owe is simply a bully option. But that doesn’t mean it’s ever the champion one.

“If you are looking astatine paying your owe disconnected faster oregon looking for the champion complaint possible, the 30-year fixed owe wouldn’t beryllium the champion option,” Gladwell said.

This is simply a communal misconception that discourages galore would-be location buyers from adjacent applying for a loan. In fact, Chad Cummings, lawyer and certified nationalist accountant (CPA) astatine Cummings & Cummings Law, calls the 20% down-payment regularisation the “biggest myth” retired determination erstwhile it comes to mortgages.

The main vantage of putting 20% down is that it helps you debar backstage owe insurance.

“While avoiding backstage owe security is ideal, astir accepted loans let down payments arsenic debased arsenic 3% to 5%,” Cummings explained. “In Florida and Texas, waiting to prevention 20% often means getting priced retired entirely. Meanwhile, rents proceed rising and nary equity is built.”