When it comes to buying a home, applying for a mortgage is usually the norm. While applying for a mortgage is a crucial step in purchasing a home, many people are hesitant to do so because of some common myths about mortgages. In this article, we will debunk some of these myths, and hopefully, this will help you feel more confident about applying for a mortgage.
Myth #1: You Need a Down Payment of 20%
This is one of the most pervasive myths about mortgages. While it is true that having a down payment of 20% can help you avoid paying private mortgage insurance (PMI), this does not mean that it is mandatory. What many people do not know is that there are different types of mortgages that allow you to put down as little as 3% or 5%. So, don’t let the myth of the 20% down payment discourage you from pursuing your dream of homeownership.
Myth #2: You Need Perfect Credit to Get a Mortgage
While having good credit is important, it is not necessary to have perfect credit to apply for a mortgage. Mortgage lenders understand that not everyone has a perfect credit score, and they take other factors into account when evaluating your application, such as your income, debt-to-income ratio, and employment history. So, if you have less-than-perfect credit, don’t let this stop you from exploring your options.
Myth #3: You Can Only Get a Mortgage from a Bank
While banks are common sources of mortgages, they are not the only option. There are many other types of mortgage lenders, such as credit unions, mortgage brokers, and online lenders. Each of these lenders has its pros and cons, so it’s essential to shop around and compare the rates and terms they offer before deciding which one to use.
Myth #4: You Cannot Refinance If You Have Already Refinanced
Some people believe that once you refinance your mortgage, you cannot do so again. This is not true. You can refinance your mortgage as many times as you want, provided that it makes sense financially. However, it’s essential to keep in mind that refinancing comes with costs, such as closing costs, so you should only consider it if the benefits outweigh the costs.
Myth #5: You Cannot Get a Mortgage If You Are Self-Employed
While it can be more challenging for self-employed individuals to get a mortgage than for those who work for a company, it is not impossible. There are mortgage lenders who specialize in working with self-employed individuals and can take into account their unique income streams, such as freelance income or income from a small business.
In conclusion, there are many myths about mortgages that may hold you back from pursuing your dream of homeownership. However, it’s essential to know the facts and not let these myths discourage you. By understanding the truth about mortgages, you can make an informed decision that works best for you and your family.