If it’s been a while since you last bought a home for sale in Midland, Texas, you probably haven’t had many opportunities to sit down with a mortgage broker – and that may mean you’ve heard some myths sprinkled in with your mortgage facts over the years. Check out these three mortgage myths it’s safe to ignore in 2021 (and likely from here on out) so you know exactly what you’re getting into.

3 Mortgage Myths It’s Safe to Ignore in 2021

These are common mortgage myths that it’s time to move on from:

  • You must have a 20 percent down payment
  • You should always choose the mortgage with the lowest interest rate
  • Prequalification is the same thing as loan preapproval

Here’s a closer look into each – and why it’s time to ditch them.

Downpayment

Mortgage Myth #1: You must have a 20 percent down payment

There are plenty of loan products that allow you buy a home with less than 20 percent down – among them FHA and VA loans – so you don’t have to come up with a huge sum of money to buy a home. Some loan products allow you to come up with as little as 3 percent of a home’s purchase price (and the VA loan lets you buy a home with absolutely nothing down).

Related: What is the most accurate home value website?

Mortgage Myth #2: You should always choose the mortgage with the lowest interest rate

You don’t have to pick the mortgage with the lowest interest rate – it may not be the best loan product for you. You should talk to a mortgage broker or your lender to find out about all your options; sometimes loans with low interest rates have other fees associated with them that negate the interest rate. Weigh your options carefully, because if you’re like most people, you’ll be paying on your mortgage loan for a long time. 

Approval

Mortgage Myth #3: Prequalification is the same thing as loan preapproval

Prequalification and loan preapproval are two different things – and they each carry a different amount of weight. Prequalification is simply a lender saying, “It looks like you probably qualify for a mortgage, but we’d need to see your financial documentation to be sure.” Preapproval is different; it requires you to share your financial documentation with a lender, and it’s something you can use to get a seller to take his or her home off the market. When you’re preapproved, a lender tells you, “As long as your financial circumstances don’t change significantly, we’ll let you borrow this amount of money to buy a home.”

Related: 5 tips to improve your credit score when you’re a first-time homebuyer

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