A house is probably the most expensive item you will ever buy. For that reason, it’s important to know everything you can about home buying before you get started — that includes the myths. We want to help you be a confident buyer, so we’re going to clear up the common misconceptions for you.
Myth #1: Getting Pre-Qualified is the Same as Getting Pre-Approved
These are the starting points of the mortgage process, but they are very different. Knowing which to get could be the difference between landing your dream home and losing it to another buyer.
A pre-qualification is an estimation of how much you will likely be approved for based on your finances. You provide no proof and there are no guarantees you will actually be approved for the same amount. Pre-approval means you’ve supplied proof and received a letter from a lender that states your approved loan amount. It tells you exactly how much you can afford, instead of an estimate.
Here’s which one you should get.
Myth #2: You Need to Put at Least 20% Down to Qualify for a Mortgage
This is one of the most common myths that catch first-time homebuyers. When you’re buying your first home, the thought of making a 20% down payment can be scary. But you don’t need to have 20% saved up. At Connexus, we offer mortgages that require down payments as low as 3%. A large down payment helps to lower your monthly payment, but it’s not a requirement to get a Mortgage Loan.
Myth #3: You Need an Excellent Credit Score
While having an excellent credit score obviously helps, it’s not always a problem. The average FICO® Score in America¹ is 695. Though a score of 640 is generally considered as subprime, you can still get a mortgage. If you have a lower score and need help, here are seven ways to improve your credit score.
Myth #4: Mortgage Rates are the Same Everywhere
One common misconception is that no matter where you go, you’ll get the same mortgage rate. It’s not true. For example, many credit unions (Connexus included) have less fees than big banks, so they’re able to offer slightly lower rates. Shop around for a mortgage because the rate can make a big difference on your monthly payment. Here are our latest mortgage rates.
Myth #5: Renting is Cheaper Than Owning a Home
A mortgage seems expensive because you’re buying something for $180,000. But you have to compare the mortgage payments against the rent payments. Yes, sometimes a monthly rent payment is cheaper than a monthly mortgage payment, but you have to remember a few things:
• Owning a home allows you to build up equity — a very valuable asset. Renting doesn’t lead to equity.
• Rent payments increase every year. A mortgage can have fixed payments throughout.
• Owning a home can include tax benefits.
If you want to find out for sure which is better for you, check out this renting vs buying calculator.
Myth #6: The Mortgage Process is Difficult
This is the classic myth. Mortgages are notorious for being difficult and stressful. In reality, it’s all about the lender. Some lenders don’t communicate well, and that makes it difficult for borrowers. But we pride ourselves on making mortgages simple for our members. Our Mortgage Team guides you through the process every step of the way, making it as smooth as possible.
Here’s what one member had to say: “Connexus has always been so quick to respond to my mortgage questions. And what an engaging group. I feel like I have more than just a banking relationship — I feel like I have new friends!” – Chris, Georgia
There are a lot of mortgage myths out there. The truth is, getting a mortgage is much easier than you may think. If you’re looking to buy a home, try Connexus for your mortgage loan.