Home Buying Myths: Common Misconceptions Explained

Information and advice for first-time homebuyers is everywhere. Unfortunately, many of the most commonly accepted truths about buying a home are either outdated or false. Here are some of the biggest myths about home buying to help you understand the facts.

Myth: You Can't Buy a Home With a Bad Credit Score

It is possible to qualify for a mortgage and buy a home even with a low credit score. Luckily, credit scores are just part of what lenders consider when you apply for a loan. While a high credit score might equal lower interest rates, a low credit score does not necessarily mean rejection.

There are specific loans available for home buyers with lower credit scores. Loans provided by the Federal Housing Administration (FHA), for example, are excellent resources regardless of your financial situation.

Myth: A 20% Down Payment Is Always Required

While it's a common assumption that your down payment will always be 20% of the purchase price, the minimum requirement is often much lower. It depends on personal preference and the terms of your mortgage. Many lenders are flexible with down payment sizes but will adjust other factors like interest rates accordingly. A higher down payment often means lower rates and less money to borrow, but there are plenty of options available for those wishing to pay less up front.

Myth: Mortgage Pre-Approval Doesn't Matter

One of the most important things to do before buying a home is to get pre-approval from a mortgage lender. While not always required, pre-approval benefits you in several ways. One advantage of pre-approval is that you go into your home search knowing exactly how much home you can afford. Another benefit is showing sellers you're financially responsible and less likely to back out on a sale due to lack of financing.

These are only a few common misconceptions about buying a home. While there is a wealth of helpful information and guidance for first-time homebuyers, it's always worth your time and money to do some extra research to determine what will work for you.