The American Dream has changed a lot, making homeownership less common with newer generations. You might be the first person in your social group to buy a home. As always, people have plenty of advice to give, but there are many misconceptions about mortgages that you need to know about.

You Actually Don’t Need A Big Down Payment

Private mortgageĀ insurance is a monthly expense that is avoided by paying 20% of the cost of the home up front, but a 20% down payment is not required for most loans. For first time home buyers, there are plenty of loans options and grants that require minimal down payments.

Pre-approval Doesn’t Necessarily Mean You’ve Got The Loan

If a finalized loan is a green traffic light, pre-approval is only a yellow light. Proceed with caution because you can still be denied. Pre-approval just tells you what price range to shop for. Until you’ve closed, the loan can still fall through if your finances change.

The Best Loan Doesn’t Always Have The Lowest Rate

While the interest rate is important, there are other factors of a loan to take into consideration. What happens if you can’t make a payment? Can the interest rate change? You have to look at the big picture of a loan rather than a little detail called interest rate.

Rent May Be More Expensive Than Mortgaging

Rent is based on how much people are willing to pay. Mortgage rates are based on dividing the price of the home (plus interest) over the life of the loan. Depending on the conditions of your local housing market, it’s quite possible that renting is more expensive than buying.

Buying A Home Isn’t Always The Best Decision

Buying a home makes sense for some people, but it doesn’t always make sense. The fact that you can afford a mortgage payment doesn’t mean you afford to make home repairs. Buying a home is not a mere milestone. It’s a serious decision that requires personal analysis.