If you’re in the market for a home loan, here’s the good news: Mortgage rates are falling thanks to a couple of recent Federal Reserve rate cuts, according to Freddie Mac — and they might push even lower in the months ahead.
Before heading to the nearest loan officer, though, you should be aware of common misconceptions about mortgages. Below are six mortgage myths many homebuyers still believe, according to experts.
Also here are mortgage hacks that actually work.
There’s a big difference between being pre-qualified and pre-approved for a mortgage loan. With the former, the application hasn’t been submitted to underwriting for review, according to Kylee Gladwell, mortgage loan officer at Wasatch Peaks Credit Union.
But when you get pre-approved, your file has been both submitted to underwriting and approved. This can simplify the process considerably.
“If you are able to get a pre-approval done, that would be the best option,” Gladwell said.
For You: The Wealthiest Suburb in Each of America’s 50 Largest Metro Areas
Trending Now: How Middle-Class Earners Are Quietly Becoming Millionaires — and How You Can, Too
While having an excellent credit score (800 or higher) can help you get the best loan terms, it’s not a requirement for getting a mortgage. You will have a hard time getting approved with a poor score (typically, 579 or less, according to Experian), but anything above that might put you in place for a loan.
Lenders in 2025 are focused on “total financial health — not just a credit score,” said Karl Benjamin, executive vice president of third party origination at Cardinal Financial.
If your budget requires a low monthly payment, then a 30-year fixed mortgage is a good option. But that doesn’t mean it’s always the best one.
“If you are looking at paying your mortgage off faster or looking for the best rate possible, the 30-year fixed mortgage wouldn’t be the best option,” Gladwell said.
This is a common misconception that discourages many would-be home buyers from even applying for a loan. In fact, Chad Cummings, attorney and certified public accountant (CPA) at Cummings & Cummings Law, calls the 20% down-payment rule the “biggest myth” out there when it comes to mortgages.
The main advantage of putting 20% down is that it helps you avoid private mortgage insurance.
“While avoiding private mortgage insurance is ideal, most conventional loans allow down payments as low as 3% to 5%,” Cummings explained. “In Florida and Texas, waiting to save 20% often means getting priced out entirely. Meanwhile, rents continue rising and no equity is built.”
