When beginning the buying process, potential homeowners are often given advice by those who have purchased homes before. While some of this advice is certainly useful, some is unsubstantiated, and some is inaccurate to some degree. This may have had to do with the time the advice-giver purchased their home; indeed, they may have done so in a different financial situation under different mortgage guidelines. Regardless of the reason, homebuyers need to be aware that part of this advice boils down to myths about mortgages, rather than facts.
Myth #1: Getting pre-approved is not helpful. While being pre-approved for a mortgage is no guarantee of getting the loan later, it does send a signal to sellers that the buyer is serious about their offer. It also gives the buyer an idea of how large of a mortgage they qualify for, which will help them determine which properties they can afford.
Myth #2: It is easier to get a mortgage from the bank the borrower currently uses. While it may be more convenient, borrowers may be able to find a better deal on a mortgage from another lender. Buyers should always compare several lenders before selecting one.
Myth #3: Buyers should always select the mortgage with the lowest rate. While this is often the first inclination a borrower has, some low interest rates are offset by other factors. For example, the rate may be attached to an adjustable-rate mortgage, meaning it could increase within a few years.