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Stressed over saving that 20% for a down payment? Nervous about the idea of refinancing? Worried your parents can’t help you out financially when it comes to buying a home? 

Take a deep breath.  

Good news! There are a lot of common mortgage myths that, well, just aren’t true.  

So, what’s fact and what’s fiction? How much do you REALLY have to save for a down payment? Let’s find out! 

20% Down Payment

You’ve most likely heard somewhere along the way you absolutely need a 20% down payment. While putting a higher amount down can decrease monthly payments and have other benefits, it’s not the only option.  

In fact, some programs, such as FHA loans, only require as little as 3.5% down. Seriously. Now that is a much easier number to save for! 

Refinancing ONLY Lengthens the Life of the Loan

Yes, this CAN be true depending on the type of refinance. However, it is not always the case and there are other, great benefits to refinancing your home loan.  

Refinancing can be an intimidating idea.  It can make you feel like you’re taking two steps backward, but really, depending on your individual situation, refinancing is taking a step in the right direction. Some beneficial refinance options are: 

• Cash-Out  

• • A cash-out refinance allows you to use the equity you’ve gained over the years to put money back in your pocket. Think home improvement, college savings, vacation, debt consolidation.  

• Lower Payment 

• • Want to improve your financial security? Choose a refinance that means lower monthly payments. Yes, it may lengthen the overall life of your home loan, but it allows your money to go toward other monthly expenses.  

• Shorter Loan Term  

• • If you’re ready to pay off your mortgage sooner than anticipated, refinance to reduce the amount of interest you’ll pay. This decreases the overall cost of your loan payments.  

Pre-Qualification & Pre-Approval are the Same 

Myth! Pre-qualification and pre-approval are in fact, not the same! But, how are they different? 

Pre-Qualification: A pre-qualification for a home loan can be issued after a Mortgage Consultant gathers some basic information from you. This helps determine the amount of home you might be able to afford, giving a general idea of what the loan amount could be. This is a less formal approval and is mostly given based on information the borrower is reporting before it is verified via documentation or credit checks.  

Pre-Approval: This is issued once paperwork is submitted and reviewed. This paperwork includes official documents, such as credit history, bank statements, debt and assets, and more. Pre-approval gives you a more accurate loan budget, so you know what your homebuying price range is.  

Being pre-approved at open houses really shows you’re a serious shopper. 

Parents Can’t Give You Down Payment Money 

Saving money for a down payment is a big challenge. Good thing you CAN be gifted money from family members!  

However, there are specific steps to follow when it comes to accepting this money. Before doing anything, speak with a Mortgage Consultant to ensure everything is done properly to keep you on the right track for homebuying. 

Need to get connected with a Mortgage Consultant? Check out our website today.  

Do you feel a little less stressed about saving that 20% down? Feeling a little more positive about the benefits of refinancing? Good! Remember, don’t believe everything you hear, especially when it comes to homebuying! 

If you have any questions, we’re happy to help!