Mortgage myths can cost you—and even keep you from reaching your big-picture goals. Here are several worth rethinking:

Myth #1. You need 20 percent down to buy a house.

Not true. While the typical down payment was 20 percent in 1981—likely where the 20 percent “rule” originated—it’s since dropped to as low as 6 percent for first-time buyers. And, you don’t have to come up with all the funds yourself. Other options include: gifts from family; grants from nonprofit agencies or public institutions; state down payment assistance programs; and employer assistance.

Depending on the loan you choose, a down payment may not even be required. VA and USDA Loans have 0 percent down payment requirements for those who qualify.

Myth #2. You need perfect credit.

Having good credit can be a great help in qualifying for a more competitive mortgage rate. But otherwise, you still have options:

• Several loans exist for borrowers with different circumstances.
• FHA, VA, and the Fannie Mae HomeReady loan programs are a few examples.

The same goes for student loan debt: Changes have been made to how student loan debt is calculated when applying for an FHA mortgage—now using an actual monthly payment instead of a percentage of total debt. This change was intended to remove barriers to homeownership for more homebuyers.  

Myth #3. You can’t get a mortgage if you’ve been denied in the past.

No need to throw in the towel just yet. Many times, a denial is a golden opportunity to enlist the help of your Loan Officer to come up with a plan of action. This may include steps to improve credit, pay off high interest debts, and/or increase income, where needed. If your mortgage application was denied years ago, that may be ancient history. It’s always worth testing the waters to find out where you stand.

Bust the myths with a complimentary mortgage check-in.

Myth #4. You should find your dream house before you get financed.

Even though the housing market has moderated, it still doesn’t hurt to have an advantage. Getting *pre-approved before you house-hunt is always a smart move—it can save you the time and disappointment of shopping in the wrong price range. It also shows sellers you’re serious. If you’d like to take it a step further, ask your Loan Officer about using Academy’s Pre-Approval+ to expedite your closing and help your offer stand out.

Myth #5. Getting *pre-approved is a guarantee.

*Pre-approval is not a commitment to lend, as your Loan Officer will likely tell you. A *pre-approval offers an initial estimate of how much house you can afford to buy. But even after getting *pre-approved, it’s still possible for a mortgage to fall through before closing. Some potential reasons a mortgage may be denied after *pre-approval include changing jobs, changes to your credit report, and taking on additional debts.

Myth #6. You should always look for the lowest rate.

It’s no secret mortgage rates have increased from the rock-bottom levels seen during the pandemic. And yet, they still sit below the historical average and are nowhere near their 1980s peak.

If you’re preparing to buy a house, it can be tempting to hunt for the lowest rate. But just as important is finding a Loan Officer who will get to know your unique needs and present you with your most affordable mortgage options. Homebuyers are often surprised to hear that it’s not all about the rate; using a Temporary Buydown or one of Academy’s low or no down payment programs may be more beneficial to your situation.

Myth #7. All lenders are basically the same.

The truth is, no two mortgage lenders are alike. Proof of exceptional service, decades of industry experience, and a broad selection of loan products are a few things to look for if you want to separate the “great” from the “good.” Also, seek out a lender that keeps loan processing, underwriting, and funding local; using a direct lender (like Academy Mortgage) is a strong indicator that your loan is more likely to close on time.

Myth #8. Once you get a mortgage, it usually doesn’t need any updates.

What makes your mortgage different from a fine cheese or wine? Your mortgage won’t age nearly as well. In fact, many industry professionals consider it a pricey mistake if you “set it and forget it,” i.e., if you neglect to check in on your mortgage after your loan closes. To support your financial health, it’s a good idea to schedule a complimentary annual mortgage check-in just like you would an annual wellness exam.

Skipping this yearly chat with your Loan Officer could prove costly. You might miss out on opportunities to lower your monthly payment, drop PMI, or shorten and pay off your loan sooner.

Myth #9. You’ll get penalized for paying off your mortgage early.

Speaking of paying off your mortgage sooner, some loans have a prepayment penalty to discourage early payoff, but Academy Mortgage Loans do not. If your mortgage has a prepayment penalty, you can sidestep this fee and still get ahead by paying extra toward your loan’s principal balance. To find out if paying off your mortgage can reduce your monthly expenses and save you on interest, ask your Academy Loan Officer.