Buying a home can be a challenge. Myths about market conditions or the mortgage process can lead to some confusion.

We want to clear up three myths about the mortgage process to help you better prepare for the road ahead.

Myth: If I get pre-approved, I’m guaranteed a home loan

Not exactly. When future homeowners apply for a mortgage, a pre-approval is a crucial step.

Being pre-approved shows the buyer’s commitment. It’s even viewed positively by the seller, as they weigh offers from candidates already pre-approved for a home loan.

Lenders sign off on pre-approvals and agree on a loan amount after checking the applicant’s credit, income, employment details, and other required documents.

The pre-approval will be converted into a formal loan, assuming nothing changes from the applicant’s information, such as income or credit score.

Avoid big changes like opening new credit cards or withdrawing funds from saving accounts during this part of the process.

It’s also worth keeping in mind that a pre-approval is not contingent on any particular property the buyer might be interested in. The final pre-approval amount will likely change once a purchase price is agreed to.

Myth: 30-year mortgage beats out others

It’s true, a 30-year fixed rate mortgage loan is most common. However, that’s not because it delivers the biggest value on interest rates.

Applicants who are able to afford a little more each month on their mortgage can opt for a 15-year loan, which typically features lower interest rates.

Compare the pros and cons of the terms so the outcome aligns with your financial goals.

Myth: Paying off a mortgage as quickly as possible is ideal

Not so fast. Instinctively, paying off a loan sooner than the projected payoff date is a sound financial practice.

The reality is that the extra money used to make a larger mortgage payment can sometimes be used more effectively elsewhere.

Instead of using extra money to make an extra payment, some homebuyers may decide to invest in retirement or other funds with a higher return. It is also advisable to use extra money to tackle debt with higher interest rates.

Buying a home is a big decision with many moving parts. That’s why it’s important to have a grasp of the process, which will increase your confidence once you begin this exciting journey.

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