4 mortgage myths you need to know!

Did you know that your interest rate is not the most important part of your loan? In this video, I’m going to debunk the 4 most common myths that home buyers have when purchasing a property. We’ll look at everything from interest rates to downpayments to ease any stress you have about the home buying process.

Questions About The Home Buying Process 

It’s 100% normal to feel nervous, confused, and stressed out when buying a home. Most people in your position are wondering things like how much do I need to put down? What’s my total monthly housing payment going to be? What kind of interest rate should I even be looking at? 

If you turn to Google for all your questions, it might be frustrating. It will also probably confuse the heck out of you. Let’s be honest: unless you’re a numbers person, this stuff is really boring. So I’m going to save you a whole bunch of time researching. 

After 17 years of helping hundreds and hundreds of home buyers purchase their homes, there are four myths that I want to bust for you. These are things that keep people from ever buying homes. Knowing the truth behind them will ensure a smooth process. Remember, even though buying a house can be a little bit stressful, it doesn’t have to be. 

Myth #1: Your Interest Rate Is The Most Important 

The first common property myth is that your interest rate is the most important aspect of your loan. The truth is that your interest rate is not the most important part of your loan; your strategy is. That’s why your financing needs to be based on a few things. 

First, how long are you going to live on the property? What do you plan on doing with the property in the short term and long term? Will you be making any improvements to the property within the first year? Do you have a down payment? And better yet, how much?

Did you know if you don’t put 20% down you have an additional charge with your mortgage payment? It’s called mortgage insurance. All of these things go into the best possible loan solution for you, which in turn goes into your interest rate. But if you let your interest rate dictate your loan terms, trust me: I’ve never seen it work out.

Myth #2: You Need Perfect Credit

Common myth number two is that you must have perfect credit to buy a house. I know your parents, grandparents, aunt, uncle, brother, and sister all tell you that you have to have perfect credit to buy a house. I’m here to tell you that’s just not true.

Today, there are all types of loan programs for people that don’t have perfect credit, each with its own set of pros and cons. For example, an FHA loan can go down to a 580 credit score with as little as 3.5% down. On the other hand, maybe you’re a veteran. You can get a VA loan with a credit score down to 580 with 0% downpayment and no monthly mortgage insurance. 

However, did you know that improving your credit score can save you money? For example, a 1% change in interest rate can save you thousands over the loan. So no, you do not need perfect credit. But the better the credit score, the better your interest rate and loan terms. 

Myth #3: You Need A Large Downpayment

The third myth is that you need a large downpayment to purchase a home. This is false; you do not need 20% down to purchase a home. Just like your grandparents, parents, and uncles told you that you need perfect credit, they probably also told you that you need 20% down to purchase a home. I’m here to tell you that’s just not true. 

The truth is that times have changed since Grandad bought his last property. There are all types of loan programs for you to purchase homes with little to no money out of pocket. One of the things you may want to consider is whether you want to tie up a large chunk of money when you can use that money in other areas to build wealth.

Everybody’s in a different situation. My biggest piece of advice is to make sure you meet with your lender to talk about putting a little bit of money down, a lot of money down, or a big chunk down.

Myth #4: I Can Never Buy A House

Common myth number four is that somebody like me can never buy a house. Again, this is just not true. Many times most people are shocked at what they can afford. A lot of times, it’s less than what they’re paying in rent. 

Where you want to be careful is when doing preapprovals online. Just because some online website approved you for $500,000 does not mean you should spend $500,000. You want to buy in the price range that’s affordable for you and affordable as a monthly payment. Ultimately, two things are going to determine how much you can afford.

Number one is your credit score. Number two is your debt to income ratio. Ultimately, there are a few other things that are going to be looked at as well, such as how long you’ve been at your job, how much money you have to work with, and what your credit history looks like. 

Getting Your Dream Home

I hope this helped you understand the four biggest, most common myths that we debunk every day at the Rebecca Foote Mortgage Team. If you have any questions or would like to get pre-approved yourself, please don’t hesitate to reach out to us. We’re here to help walk you through the home buying process every day.

Don’t forget to subscribe to my channel so you never miss an episode of my show, all about the home buying process and what it’s like living in Carlisle, Pennsylvania. Stay tuned to see what I feature next!