Don’t let mortgage misinformation prevent you from becoming a homeowner. Here are seven common mortgage myths.

1. You need to put 20% down

The average down payment today is only around 10% and many home buyers pay less. While there are certainly advantages to putting 20% down, such as avoiding PMI, lower mortgage payments and potentially a better interest rate, this level of down payment is not a requirement.

2. You need a 700+ credit score

While a higher credit score might lead to a more favorable interest rate, the truth is that you can qualify for a mortgage with a score below average. Fannie Mae and Freddie Mac loans only require a 620 FICO score for conforming loans and with an FHA loan, a credit score as low as 500 may be approved. VA loans have no official minimum FICO score.

3. Home prices go down when interest rates go up

If you’re on the sidelines in a hot market, waiting for housing prices to go down in the future when rates go up, you may be disappointed with the results. Home prices may go down when the market cools and rates rise, but historical data tells us that this isn’t a foregone conclusion.

4. Your local bank offers the best rates

Many people still believe that having a personal relationship with your lender is the best way to negotiate a low rate. In truth, the best way to get a great rate is to shop your mortgage around. Even easier than that is to work with a mortgage broker who will do it for you.

5. Once you’re pre-approved with a lender

Getting pre-approved with a lender does not mean you are obligated to submit your final mortgage application with the same institution. If you’re pre-approved for one lender and find a better deal elsewhere, you’re free to go with the best offer.

6. Avoid adjustable-rate mortgages

Any mortgage type can be good or bad depending on the situation. There are reasons to choose a fixed-rate loan and reasons to choose an adjustable-rate loan.

7. Mortgages are mostly interest

Over time, as you pay down your balance, more and more of your payment will go towards your principal. If you keep your loan to term, your payments will eventually be mostly principal and only a small amount of interest.

Don’t assume, ask a pro

Before you let a mortgage myth stifle your homeownership dreams, contact a trusted mortgage broker to find out the facts.

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