Believing These 8 Myths About Mortgage Keeps You From Growing
Mortgages are a complex financial product that can be difficult to understand for many people. Unfortunately, there are several myths and misconceptions about mortgages that can prevent people from making informed decisions and growing their financial future. In this article, we will discuss 8 common myths about mortgages and debunk them.
Myth 1: You need to have perfect credit to get a mortgage
While having a good credit score can certainly help you qualify for a mortgage and get a better interest rate, you don’t necessarily need perfect credit. There are many lenders who offer mortgages to people with less than perfect credit, and you may be able to get a mortgage with a credit score as low as 580.
Myth 2: You need to put 20% down to get a mortgage
While putting 20% down on a property can help you avoid private mortgage insurance (PMI) and get a better interest rate, it is not a requirement for getting a mortgage. There are many programs available that allow you to get a mortgage with a lower down payment, such as FHA loans that require as little as 3.5% down.
Myth 3: You can’t get a mortgage if you are self-employed
While it may be more difficult to get a mortgage if you are self-employed, it is certainly possible. Lenders will typically require you to provide more documentation of your income and may require a larger down payment or a higher credit score, but being self-employed does not disqualify you from getting a mortgage.
Myth 4: You should always choose the lowest interest rate
While a low interest rate is certainly important when choosing a mortgage, it is not the only factor to consider. You should also consider the terms of the loan, the fees associated with the loan, and the reputation of the lender. Choosing the lowest interest rate without considering these other factors can lead to unexpected fees and charges down the line.
Myth 5: You should always choose a 30-year fixed-rate mortgage
While a 30-year fixed-rate mortgage is the most common type of mortgage, it may not be the best option for everyone. Depending on your financial situation and goals, you may be better off choosing a different type of mortgage, such as a 15-year fixed-rate mortgage or an adjustable-rate mortgage.
Myth 6: You should pay off your mortgage as quickly as possible
While paying off your mortgage quickly can certainly save you money on interest over the life of the loan, it may not always be the best option. If you have other debts with higher interest rates, it may be more financially beneficial to focus on paying off those debts first.
Myth 7: Refinancing is always a good idea
While refinancing your mortgage can certainly help you get a better interest rate and save money on your monthly payments, it may not always be a good idea. Refinancing can come with fees and closing costs that can outweigh the potential savings, and it may not make sense if you plan on selling your property in the near future.
Myth 8: You can’t get a mortgage if you have student loan debt
While having student loan debt can certainly make it more difficult to get a mortgage, it does not automatically disqualify you. Lenders will consider your debt-to-income ratio, which takes into account your monthly debt payments compared to your monthly income. If your debt-to-income ratio is too high, you may need to focus on paying down your student loan debt or increasing your income before applying for a mortgage.
In conclusion, there are many myths and misconceptions about mortgages that can prevent people from making informed decisions about their financial future. By understanding these myths and debunking them, you can make better decisions when it comes to choosing a mortgage and managing your finances. Remember