By NICOLE ROTHSTEIN , a contributing writer for Sunrise Banks.
As homebuying season begins, there are many misconceptions about purchasing a home that can deter potential buyers. To help clarify the process, we asked our mortgage experts at Sunrise Banks to debunk five common homebuying myths.
Myth #1: You Always Need a 20% Down Payment
A common belief is that buyers must put 20% down to secure a mortgage. However, multiple down payment assistance programs make homeownership accessible with much less upfront cash. First-time buyers may qualify for conventional loans with as little as 3% down, FHA loans with 3.5%, and USDA or VA loans that require no down payment. While a larger down payment can eliminate private mortgage insurance (PMI), it is not a requirement for securing a loan.
Myth #2: Mortgage Rates Are Directly Tied to the Federal Interest Rate
Many assume mortgage rates fluctuate directly with federal interest rates, but this is not entirely accurate. While federal rate changes impact short-term lending like credit cards and car loans, mortgage rates depend on multiple factors, including inflation, the 10-Year Treasury Note, and overall economic conditions. Buyers who can afford a home should not necessarily delay their purchase based solely on interest rate trends.
Myth #3: A Perfect Credit Score is Necessary to Get a Mortgage
While a higher credit score can secure better loan terms, buyers with lower scores can still qualify for mortgages. FHA and VA loans cater to those with lower credit scores, sometimes as low as 620, provided there are no recent bankruptcies or outstanding collections. Additionally, programs like the Sunrise Banks Credit Builder Program can help improve creditworthiness.
Myth #4: A 30-Year Fixed Mortgage is Always the Best Option
A 30-year fixed mortgage is popular due to its stable monthly payments, but it is not the only or best option for every buyer. Shorter loan terms, like 15-year mortgages, can reduce overall interest costs for those who can manage higher payments. Adjustable-rate mortgages (ARMs) may be better suited for buyers who plan to move within a few years or anticipate interest rate drops in the near future.
Myth #5: All Lenders Are the Same
Not all mortgage lenders offer the same products, terms, or customer service. Some specialize in government-backed loans, while others may have stricter guidelines or higher fees. Additionally, some lenders service their own loans, offering better long-term customer support. Buyers should compare lenders to find one that aligns with their financial goals and needs.
Making Homeownership Possible
At Sunrise Banks, we help make homeownership accessible through various assistance programs, low mortgage rates, and support for closing costs. With a dedicated team, including bilingual lenders, we are committed to helping you achieve your dream of homeownership. To learn more or to meet one of our home mortgage loan officers, visit sunrisebanks.com/mortgage.
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