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Mortgages are already intimidating as it is, and many popular mortgage myths make it much harder to take one. From being told it’s too risky and to rent instead, misguided warnings scare people out of looking at home and loan options. Understanding mortgages takes away that fear. This article discusses mortgage myths and debunks them with home loan facts. When it comes to homeownership, prospective buyers are presented with a variety of financing options, each with its own set of benefits and requirements. Two of the most popular paths are conventional mortgages and government-backed loans like FHA loans. Understanding the key differences between these options is crucial in making an informed decision about which financing route best suits your needs. In this article, we’ll explore what a conventional mortgage is, how it differs from FHA loans, and who can benefit from choosing this type of financing.
Maybe you’ve made a few late payments here and there that have affected your credit. But while it is a mortgage truth that lenders look into financial records before giving a loan, ‘good’ credit isn’t the same for all lenders. Even if your credit prevents you from getting a traditional loan, there are other options and strategies that can help you get a loan. If you have ‘bad credit’, don’t give up on your homeownership dream just yet. Looking into non-traditional mortgages is one of the home loan facts that can help you buy a home.
Renting is always cheaper.
It’s common to start out renting before you’re ready to commit to a home. In some situations, it’s the more convenient option. But just because the monthly rent payment comes out lower than the monthly mortgage payments doesn’t mean it’s actually cheaper in total.
Unlike renting, where your money does not build an investment, it’s a mortgage truth that your monthly payments can build equity over time. If you’re ready for something long-term, buying a home can build your assets over time. And if you decide to move? You can sell the property and make a profit.
Always go for the lower interest rate.
It makes sense to think that the mortgage with the lowest interest rate also has the lowest cost. However, it’s a mortgage truth that these loans are more than their interests. There are many fees not talked about, like closing fees, property tax, and other charges.
Choosing a mortgage plan based on interest rate alone is one of the most damaging mortgage myths. You might not realize how much other costs can hurt your pocket. Different loans may also increase interest over time, and the loan that had the lower interest rate can become more costly in the end.
Instead of just looking at interest rates, research the mortgage’s annual percentage rate (APR). This computes the yearly total cost of a loan, including all added costs. It will give a clearer idea of how much you’ll be spending on the mortgage.
Pay it off ASAP.
Monthly mortgage payments can be stressful, especially when you’re paying them way behind. Getting them out of your hair fast seems like a logical choice. You might feel like choosing the 15-year mortgage instead of the 30-year one, or allocating your extra monthly budget into paying it off instead of putting it into your savings, or treating yourself to something nice.
While it’s your choice, home loan facts show that there are also benefits to paying off your mortgage over a longer period. Saving up your extra money can help you make more investments, like taking up classes to get a job. Holding off on making extra monthly payments can still benefit your future without sacrificing your present.
Mortgages are too risky
They say too many things could go out of your control. Possibly losing a job, house damage, or increases in monthly payments keep people from taking a mortgage. Many wait for everything to be aligned: the right income, a stable economy, and the perfect property. But while there are risks, waiting for the perfect conditions will never make you feel ready enough.
It’s not even about being in all the right conditions, but having the right plan. If you’ve budgeted your debts, thoroughly looked into loans, and prepared extra savings for emergencies, you can prove these mortgage myths wrong and turn your house into a good investment over time.
Mortgages are hard for everyone
All the risks, long processes, and payments make mortgages seem intimidating. But like the other mortgage myths, that isn’t always the case. Some have more resources and reliable backups, while others struggle every month to make their payment. These communities often need extra support and specialized mortgage programs to make homeownership possible. Assessing your financial situation will help you seek out the plan that best supports you.
Fast pre-approvals, tailored loans, and trusted advice—that’s what you can expect with Nclusive Financial. Whether buying your first home, investing in property, or looking for the right loan, we’re here to help you make it happen. Let’s turn your next move into a reality.
Key Takeaways
- Mortgage myths scare aspiring homebuyers into waiting for the perfect timing. Understanding these myths can help them take those first steps.
- Some cheaper options, such as renting and low-interest mortgage plans, do not always end up costing you less money.
- While there are challenges in taking out a mortgage, unlearning common misconceptions and looking for the right plan will help support you throughout the process.
References
- Ernst, K. (2023, July 31). Mortgage myths busted: What to know now. CBS News. https://www.cbsnews.com/news/mortgage-myths-busted-what-to-know-now/.
- Renting vs. Buying a Home: What NOBODY Is Telling You. (2024, October 28). Renigma Properties. https://www.rentenigma.com/renting-vs-buying-a-home.
- Risks Associated with Mortgages. (n.d.) Continuum Wealth. https://continuum-wealth.co.uk/Financial-Services/Mortgages/Risks-Associated-with-Mortgages.
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