Buying a home is a major decision, and it’s crucial to have accurate information to make informed choices. Unfortunately, the world of mortgages is rife with misinformation that can lead to confusion and even costly mistakes. In this article, we’ll debunk eight common mortgage myths, helping you navigate the mortgage process with clarity and confidence.

Myth #1: A Perfect Credit Score is Necessary

Reality: While a higher credit score can improve chances of securing a favorable mortgage rate, you don’t need a perfect score. Many lenders offer mortgage options with credit scores in the mid-600s or lower.

Myth #2: A 20% Down Payment is Required

Reality: While a 20% down payment can help you avoid private mortgage insurance (PMI), it’s not a strict requirement. Various loan programs allow for lower down payments, some as low as 3% to 5%.

Myth #3: Adjustable-Rate Mortgages (ARMs) Are Always Risky

Reality: ARMs can be a viable option for certain situations, especially if you plan to move or refinance before the adjustable period begins.

Myth #4: Mortgage Prequalification is the Same as Preapproval

Reality: Prequalification provides an estimate of how much you might be able to borrow based on the information you provide, but it’s not a guarantee. Preapproval involves a more thorough assessment of your financial situation and credit.

Myth #5: You Can’t Get a Mortgage with Student Loan Debt

Reality: Having student loan debt doesn’t necessarily disqualify you from getting a mortgage. Lenders consider your entire financial picture, including your debt-to-income ratio. It’s possible to secure a mortgage while managing student loan payments.

Myth #6: You Should Always Choose the Lowest Interest Rate

Reality: While a low interest rate is important, it’s not the only factor to consider. Closing costs, loan terms, and overall financial goals should also influence your decision.

Myth #7: It’s Better to Pay Off Your Mortgage ASAP

Reality: While paying off your mortgage early can be a goal, it’s not always the best financial move. If your mortgage interest rate is low, you might be better off investing extra money elsewhere.

Myth #8: You Can’t Buy a Home with Bad Credit

Reality: While a lower credit score might limit your mortgage options, it doesn’t necessarily mean you can’t buy a home. Certain lenders specialize in working with borrowers who have less-than-perfect credit.