Mortgage Myths Debunked: Separating Fact from Fiction
Hi there, I’m Trevor Sanders, the proud owner of SD-Loans. Every day, I have the privilege of helping individuals and families navigate the mortgage process to achieve their dream of homeownership. Unfortunately, there are a lot of myths out there about mortgages that can make this journey feel daunting. Today, I want to tackle some of the most common misconceptions, clear up any confusion, and empower you with the knowledge you need to take the next step confidently.
Myth 1: You Need a 20% Down Payment to Buy a HomeThe Reality:
One of the most common myths is that you must have a 20% down payment to purchase a home. While it’s true that a larger down payment can reduce monthly costs and eliminate private mortgage insurance (PMI), many loan programs allow you to put down much less. For example, FHA loans require as little as 3.5%, and VA loans often require no down payment at all.
How We Can Help: At SD-Loans, we’ll assess your financial situation and explore options that work for you. You might be closer to homeownership than you realize!
Myth 2: Your Credit Score Must Be PerfectThe Reality:
While a higher credit score helps you secure better loan terms, you don’t need an 800+ score to qualify for a mortgage. Many lenders are willing to work with borrowers who have credit scores in the 600s, and specific programs, such as FHA loans, are designed for those with less-than-stellar credit.
How We Can Help: We’ll review your entire financial picture and help you improve your credit if necessary. We’re here to guide you every step of the way.
Myth 3: Self-Employed Individuals Can’t Get a MortgageThe Reality:
If you’re self-employed, securing a mortgage is absolutely possible—it just requires a bit more documentation. Lenders typically ask for two years of tax returns, along with other proof of income.
How We Can Help: As specialists in working with entrepreneurs and freelancers, SD-Loans knows how to present your financials to make your case. Don’t let this myth hold you back from exploring your options.
Myth 4: Prequalification Guarantees Loan ApprovalThe Reality:
Prequalification is an excellent first step in the mortgage process, but it’s not a guarantee of final approval. Prequalification is based on self-reported information, while preapproval involves a detailed review of your financial documents and credit history.
How We Can Help: We’ll take you from prequalification to preapproval, ensuring you’re prepared when it’s time to make an offer.
Myth 5: You Should Always Go for the Lowest Interest RateThe Reality:
While a low interest rate is appealing, it’s not the only factor to consider. Closing costs, loan terms, and whether the loan is fixed or adjustable all play a role in determining your total financial commitment.
How We Can Help: At SD-Loans, we’ll break down all the components of your mortgage so you can make a well-informed decision that aligns with your long-term goals.
Myth 6: Renting Is Always Cheaper Than BuyingThe Reality:
While renting may seem cheaper in the short term, homeownership often proves more financially rewarding over time. Every mortgage payment builds equity in your property, whereas rent payments do not. Additionally, tax benefits like the mortgage interest deduction can make owning a home even more advantageous.
How We Can Help: We’ll compare your rental expenses to potential mortgage costs and help you see how homeownership could be a wise investment for your future.
Myth 7: Only Banks Can Provide MortgagesThe Reality:
Banks are just one source for home loans. Mortgage brokers like SD-Loans offer access to multiple lenders, increasing the odds of finding a loan that meets your needs.
How We Can Help: As an independent broker, we shop around on your behalf. Our goal is to match you with the perfect lender and loan program.
Let’s Turn Myths into Opportunities
I hope this helped clarify some common misconceptions about mortgages. At SD-Loans, we’re dedicated to making the process transparent, stress-free, and tailored to your unique circumstances. If you’re ready to explore homeownership or just want to learn more about your options, reach out to me today. Together, we can make your dream of owning a home a reality.
Visit SD-LOANS for more mortgage information.
