5 Common Myths of a Mortgage

Myth Busting the Mortgage Process

With nearly 44 Americans renting in this country — whether out of desire, life style choices, or unsure of what steps are required to own a home — it is safe to assume that there are general questions that thousands of people either do not have the answer to or are unsure of what questions to even ask regarding buying a home.

Knowledge in the age of information is something that many people take for granted. There is certain knowledge that is naturally known to some, while others may not have been around people who have freely shared that wisdom. But, that does not mean that someone should not be proactive to research for themselves, as information abounds more today than ever before in human history. Although this list is not extensive because this article was not meant to be overwhelming, we will go over the basic and general myths of mortgages. The goal of this short article is to myth bust five common misunderstandings about the home closing process. Here are some of the most common myths about closing on a home, and the truth behind them:

1. Myth: The home closing process is long and complicated.

Truth: The home closing process does not have to be long or complicated. With the right preparation, the understanding of what is involved, and the correct education by your lender and realtor, the process can be completed relatively quickly.

2. Myth: You need perfect credit to close on a home.

Truth: You do not need perfect credit to close on a home. While having a good credit score will make the process easier, it is ultimately not required. There are many programs available for homebuyers with less than perfect credit.

3. Myth: Closing on a home is expensive

Truth: Closing on a home does not have to be expensive. There are many ways to save money on the closing costs, such as negotiating with the seller, asking for closing cost assistance from the lender, or using a closing cost credit from the real estate agent.

4. Myth: You need a 20 percent down payment to close on a home.

Truth: You do not need a large down payment to close on a home. While it may be ideal to have a 20% down payment depending on your current financials, there are programs available that can help you with a smaller down payment. For example, FHA loans only require a 3.5% down payment.

5. Myth: Only cash buyers can close on a home quickly.

Truth: Both cash buyers and financed (those who require a loan) buyers can close on a home relatively quickly. The key is to be prepared and have all of the necessary documentation in order before beginning the process. Documentation preparedness is one of the leading causes to a delayed closing.

If you are preparing to enter the market to buy a home or have been hesitant because of the market volatility, be sure to do as much research as you can ahead of time. Never be afraid to ask questions. Asking questions may make you look silly for a moment, but never asking questions will lead to ignorance for a lifetime. With the right preparation, you can go from dealing with the volatility of the renters market to being established in your very own home.

*This is not financial advice. For educational purposes only.