Buying a home? You know that an immense amount of time and work goes into applying for a mortgage, from rounding up your financial records to making sure your credit score is in top-notch condition. But did you know that there’s also a lot of misinformation and bad advice floating around when it comes to home loans? Believing these myths can cost you both time and money – so it’s important to be aware of them! In this blog post, we’re busting the most commonly believed home mortgage myths.
Myth #1: You Need Perfect Credit to Qualify for a Mortgage
Perhaps your credit score isn’t where you want it to be. Never fear! There are plenty of options for borrowers who want a mortgage despite having less-than-perfect credit. While you may not qualify for the lowest interest rates, there are still home loans available to you. For example:
- FHA loans: These loans are insured by the Federal Housing Administration and have more flexible credit requirements than conventional home loans.
- VA loans: Available to veterans, active-duty service members, reservists, and eligible surviving spouses, these home loans are backed by the Department of Veterans Affairs and offer competitive interest rates and relaxed credit standards.
- USDA loans: If you’re looking to buy a home in a rural area, you may be eligible for a loan from the U.S. Department of Agriculture. These home loans offer low-interest rates and don’t require a down payment.
Myth #2: You Need a Huge Down Payment to Buy a Home
This myth is perpetuated by the 20% down payment conventional home loans require. But there are plenty of home loan options that allow for smaller – or even no – down payments. For example, FHA loans only require a 3.5% down payment, and VA and USDA loans don’t require any down payment at all. If you’re a first-time homebuyer, there are also numerous programs and grants available that can help you with your down payment.
Myth #3: Fixed-Rate Mortgages Are Always the Best Option
While fixed-rate mortgages do offer the stability of locked-in interest rates, they may not always be the best option for you. If you’re planning on selling your home before the end of the loan term, or if you think interest rates will decrease, an adjustable-rate mortgage (ARM) could save you money in the long run. ARMs typically start with a lower interest rate than fixed-rate mortgages, but the rate can increase – or decrease – over time.
Myth #4: Mortgage Interest Isn’t Tax-Deductible
This one is partially true. While you can no longer deduct interest on home equity loans (also called HELOCs), you can still deduct the interest on your primary mortgage – as long as it doesn’t exceed $750,000. So if you’re itemizing your deductions, be sure to include your mortgage interest!
There are plenty of other home loan myths out there – but these are some of the most common (and costly) ones. When you’re ready to apply for a home loan, do your research and work with a reputable lender to make sure you’re getting the best deal possible.
The Mortgage Genie Busts Home Mortgage Myths – and More
If you have other questions you can talk to an expert by calling Karen Douglas at the Mortgage Genie. She’s happy to help you make the best decision for your situation. Contact Karen at (925) 648-0981. You can also view her client testimonials by clicking here.