Getting ready to buy a new home? Whether you’re doing so for the first time or an old hand at the home-buying process, you’re likely still a little befuddled by the mortgage process.
It can feel very complicated and confusing even for those of us who’ve been in the banking industry for years! Part of the reason it’s confusing is that there’s so much inaccurate information out there.
That’s why today we’re taking a few minutes to dispel some common myths about mortgages. Read on to get the details from Myth Busters: Mortgage Edition.
Myth 1: You Can’t Get a Mortgage Without a Big Down Payment
You’ve probably heard that you need a down payment of at least 20% of the purchase price. But if you don’t have that much saved, that doesn’t preclude you from getting a mortgage or buying a house!
With many conventional mortgage loans, you can obtain the loan with as little as 3% down. In some cases, with government-backed loans, you can even get a mortgage without any down payment at all.
Myth 2: If You’re Pre-Qualified, You’re Also Pre-Approved
Not quite! Pre-qualifying for a loan is a very preliminary step. Your lender will gather some basic financial information and offer you guidance on how much of a loan you can reasonably afford.
When you gain pre-approval for a mortgage, on the other hand, your mortgage lender will take additional steps to verify the information you’re providing to them. This is a more significant step toward obtaining a mortgage.
Myth 3: You Need Perfect Credit to Be Approved for a Mortgage
It’s true that your credit score plays a large role in obtaining a mortgage, as it does anytime you seek to open a line of credit or a loan. But having a less-than-optimal credit score doesn’t automatically mean you won’t be able to get a mortgage loan.
There are a variety of loan options with differing credit standards, and your mortgage lender can help guide you to a loan that will work best for you. The higher your credit score, obviously, the better your interest rate will be—but having a lower score doesn’t make a mortgage a no-go for you.
Ready to take steps toward homeownership? Get in touch today to begin the mortgage pre-approval process!
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