Hello, I’m Trevor Sanders, owner of SD-Loans. Helping families on their journey to homeownership isn’t just what I do — it’s my passion. Every day, I meet people who are unsure if they can ever own a home, often because of misconceptions about the mortgage process. Today, I want to tackle some of the most common mortgage myths out there and set the record straight. Let’s bring some clarity to what can feel like an overwhelming process and empower you to make informed decisions about your financial future.
Myth 1: You Need a 20% Down Payment to Buy a HomeThe Truth:
While putting 20% down can eliminate the need for private mortgage insurance (PMI) and reduce your monthly payments, it’s far from a requirement. In fact, many loan programs allow for significantly lower down payments. For example, FHA loans require as little as 3.5% down, and if you qualify for a VA loan, you might not need a down payment at all.
Why This Myth Persists: The 20% figure has been ingrained in our minds for decades as the gold standard for financial readiness. While it’s a great target to aim for if possible, stressing over this number often holds people back from entering the market sooner.
How We Can Help: At SD-Loans, we evaluate your financial situation and show you the many options available. You may be closer to homeownership than you think.
Myth 2: Your Credit Has to Be PerfectThe Truth:
While a higher credit score can help you secure better terms, you don’t need a flawless score to get a mortgage. Many lenders work with borrowers who have scores in the 600s, and FHA loans are designed specifically for people with less-than-perfect credit.
Why This Myth Persists: The fear of being judged for past financial missteps can deter people from applying for a mortgage. However, credit scores are just one piece of the puzzle.
How We Can Help: We take a holistic view of your financial picture, including income, assets, and debt-to-income ratio. Together, we’ll create a plan to improve your credit if needed and guide you through the application process.
Myth 3: You Can’t Get a Mortgage if You’re Self-EmployedThe Truth:
Being self-employed might require additional documentation, but it’s absolutely possible to qualify for a mortgage. Lenders typically look at two years’ worth of tax returns and other income verification.
Why This Myth Persists: The paperwork can feel intimidating, and self-employed individuals often worry their fluctuating income disqualifies them from homeownership.
How We Can Help: At SD-Loans, we specialize in working with business owners and freelancers. We know how to present your financials in the best light to help you secure a loan.
Myth 4: Prequalification Means You’re Guaranteed a MortgageThe Truth:
Getting prequalified is an excellent first step, but it’s not the same as being preapproved. Prequalification is based on the information you provide, whereas preapproval involves a deeper dive into your finances and credit history.
Why This Myth Persists: It’s easy to misunderstand the difference between these two processes, leading to false confidence during the home search.
How We Can Help: We guide you from prequalification to preapproval and explain every step along the way to ensure there are no surprises.
Myth 5: You Should Always Choose the Lowest Interest RateThe Truth:
While interest rates are important, they’re just one factor to consider. A loan with a slightly higher rate but lower fees could end up costing less over time. Plus, adjustable-rate mortgages (ARMs) might offer lower initial rates, but they can fluctuate after the fixed period ends.
Why This Myth Persists: Interest rates are the most advertised aspect of a loan, but they don’t tell the whole story.
How We Can Help: At SD-Loans, we break down the total cost of your loan so you can make the best decision for your long-term financial health.
Myth 6: It’s Cheaper to Rent Than to BuyThe Truth:
In some markets, renting can seem more affordable upfront, but buying often proves to be a better investment over time. Mortgage payments build equity, while rent payments do not. Additionally, tax deductions for mortgage interest and property taxes can offset costs.
Why This Myth Persists: The upfront costs of buying a home, like the down payment and closing fees, can make renting feel more accessible.
How We Can Help: We’ll show you how homeownership could align with your budget and build wealth over time, making it a financially sound decision.
Myth 7: You Can Only Get a Mortgage from a BankThe Truth:
Banks are just one option. Mortgage brokers like SD-Loans can offer access to multiple lenders, increasing your chances of finding a loan that fits your needs.
Why This Myth Persists: Banks have a longstanding reputation as the go-to mortgage source, but that’s only because fewer people know about alternatives.
How We Can Help: As an independent mortgage broker, we’re not tied to one lender. We’re committed to finding the right loan for you, no matter where it comes from.
Let’s Talk About Your Mortgage Goals
I hope this helped clear up some of the confusion around mortgages. At SD-Loans, we’re here to guide you through the process with personalized attention and expert advice. If you or someone you know is ready to take the next step toward homeownership, contact me today, visit: https://sd-loans.com/ . Let’s work together to make your dream of owning a home a reality.
