Young couple applying for a mortgage loan.

6 Modern Mortgage Myths You Shouldn’t Fall For

Home Ownership

A house is probably the most expensive item you will ever buy. For that reason, it’s essential to know everything you can about home buying before you start— and that includes clearing up any myths.

We want to help you be a confident buyer, so let’s discuss a few common mortgage myths and misconceptions in this blog.

Myth #1: Getting Pre-Qualified is the Same as Getting Pre-Approved

Pre-qualification and pre-approval 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 estimates the likely approval amount based on your finances. You won’t need to provide proof of the numbers (pay stubs, etc.), and there are no guarantees that you will receive approval for the same amount. Pre-approval, on the other hand, 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 as opposed to an estimate.

Learn more about the differences between pre-qualification and pre-approval.

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 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%.

Of course, a larger down payment helps lower your monthly payment—and it can help you avoid paying PMI—but it’s not necessarily a requirement to get a mortgage loan.

Myth #3: You Need an Excellent Credit Score

While having an excellent credit score can help secure a better mortgage rate, having a less-than-stellar score isn’t always a deal breaker. In 2023, the average FICO® Score in America was 718 (Source: FICO). Though a score of 640 is generally considered subprime, it doesn’t necessarily mean a mortgage is out of reach.

If you have a lower score and would like some ideas for increasing it, 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 lower fees than big banks, so they may be able to offer slightly lower rates. Shop around for a mortgage, because even a small rate difference can mean a lower monthly payment (and significant savings over the life of the loan). Check out 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 valuable asset. Renting doesn’t lead to equity.
  • Rent payments can increase every year, whereas many mortgages offer fixed payments throughout.
  • Owning a home can include tax benefits. 

Are you curious about how much home you could get for the cost of your current monthly rent? Check out this Mortgage Payment Calculator.

Myth #6: The Mortgage Process is Difficult

This is the classic myth. Mortgages are known 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.

Call Connexus for Your Next Mortgage

Here’s what one member had to say about our Mortgage process: “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 great mortgage can be easier and more affordable than many people think. If you’re looking to buy a home, try Connexus for your Mortgage loan.