5 Common Mortgage Myths

Oct 10, 2024
2 min read

Updated: Jul 14

Mortgage myths often begin with a rule that may apply in one situation and then gets repeated as though it applies to everyone. The more accurate approach is to review the borrower, property, loan structure, and current guidelines together.

Quick Takeaway: Do not make a homebuying decision based on one credit-score number, one down-payment percentage, or one advertised rate. Mortgage qualification is more complete than any single rule.

Myth 1: Every Buyer Needs 20% Down

Different programs may allow different down-payment structures. Eligibility, mortgage insurance, property type, reserves, and total cost still need to be reviewed.

Myth 2: Credit Must Be Perfect

Credit affects eligibility, pricing, and available options, but there is no universal definition of perfect. The complete credit history and lender requirements matter.

Five common mortgage myths — Mortgage myths become clearer when the complete financing picture is reviewed.

Myth 3: Preapproval Guarantees the Loan

Preapproval is based on current information. Final approval still depends on updated documentation, the property, appraisal or valuation, insurance, title, and underwriting.

Myth 4: The Lowest Rate Is Always the Best Deal

Rate should be reviewed together with points, lender fees, mortgage insurance, term, cash required, APR, adjustment risk, and how long the borrower expects to keep the loan.

Myth 5: Refinancing Automatically Saves Money

A refinance can create costs, reset the term, change the loan balance, or affect equity. The goal and break-even analysis should be clear before proceeding.

Important to Know: Program and lender requirements change. Current eligibility should always be verified instead of relying on an old rule or social-media post.