Thinking of buying a home but feel held back by mortgage myths? Don’t let misinformation keep you from taking the next step! In this post, we’ll break down some common mortgage myths and help you understand the reality.
Myth 1: "You Need a 20% Deposit to Get a Mortgage."
One of the most pervasive myths is that you need a hefty deposit—usually 20%—to secure a mortgage. However, there are mortgage options available with as little as a 5% deposit . In fact, some lenders, subject to their own criteria and eligibility, can offer a mortgage with no deposits. Theses are much less common and have eligibility applied to them, so please get in touch if you are looking to discuss a mortgage with no deposit.
Myth 2: "You Must Have a Perfect Credit Score to Qualify for a Mortgage."
It’s true that your credit score affects the type of mortgage you can get and the rate you’re offered, but you don’t need a perfect score. Many lenders work with borrowers who have less-than-ideal credit. Different mortgage programs cater to a range of credit profiles, and even if your score isn’t stellar, you can still find financing options. What’s more, there are steps you can take to improve your credit score before applying.
Myth 3: "Self-Employed People Can’t Get Mortgages."
Being self-employed doesn’t exclude you from getting a mortgage! While self-employed individuals may have to provide additional documentation, like tax returns and business accounts, many lenders are experienced in working with self-employed borrowers. Some mortgage providers even offer products specifically designed for freelancers and business owners. The key is to demonstrate consistent income and keep well-organized financial records.
Myth 4: "Fixed-Rate Mortgages Are Always the Best Option."
A fixed-rate mortgage can offer stability with a set interest rate, but it isn’t always the best option for everyone. Depending on your financial situation and plans, a variable or adjustable-rate mortgage might actually be a better fit. For example, if you expect to move or refinance within a few years, a variable-rate mortgage may offer lower initial payments. Each mortgage type has pros and cons, and a mortgage broker can help you weigh these based on your unique circumstances.
Myth 5: "It’s Cheaper to Rent Than to Buy."
Renting might feel like a less expensive option, especially with the rising costs of living, but it’s not always cheaper in the long run. With each rent payment, you’re not building any equity. A mortgage, however, is an investment in your future, as it allows you to build equity and potentially benefit from property appreciation over time. Depending on the area, buying may even result in lower monthly payments than renting, especially when you factor in fixed mortgage payments versus increasing rents.
Myth 6: "You Shouldn’t Apply for a Mortgage if You Have Student Debt."
Student debt can be a hurdle, but it doesn’t have to prevent you from getting a mortgage. Lenders look at your debt-to-income (DTI) ratio, so as long as you can show that you’re able to handle a mortgage payment along with your student debt, it’s entirely possible to qualify. Many people successfully buy homes with student loans, and there are strategies to manage your DTI that can improve your application’s appeal.
Myth 7: "All Mortgage Brokers Are the Same."
Not all mortgage brokers are created equal. A reputable broker can provide personalized advice, access to various mortgage products, and even negotiate better terms on your behalf. Working with a trusted broker, like Richard Jennings Mortgage Services, can make a significant difference in finding the best mortgage to suit your needs, especially if you’re looking for specific products or have unique financial considerations.
Final Thoughts
Understanding the mortgage process and debunking these myths can empower you to take confident steps towards homeownership. The mortgage journey is different for everyone, and by seeking out accurate information and expert advice, you can make decisions that are best for your circumstances.
If you have questions about mortgages or are ready to start the journey, don’t hesitate to reach out to a trusted mortgage broker. Here at Richard Jennings Mortgage Services, we’re always here to help!
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