Stop Losing Money on Your Mortgage Today

Are You Making These Common (and Costly) Mortgage Assumptions? Stop Losing Money on Your Mortgage Today

When it comes to buying a home or refinancing your current mortgage, many people operate under common assumptions. These assumptions could end up costing them more in the long run. While it’s natural to think you know what to expect, mortgage processes can be complicated. These assumptions might seem harmless, but they could hurt your financial situation in the long term.

At Truth Group, we’re here to help you make well-informed decisions. Let’s dive into some of the most common and costly mortgage assumptions people make—and how you can avoid them.

Assuming Your Credit Score is Good Enough for Any Loan

Many people assume their credit score is automatically strong enough to qualify for a mortgage. However, even a slightly lower-than-expected credit score can result in higher interest rates or even rejection from lenders. If you’ve recently checked your credit score and found it lacking, don’t worry. There are steps you can take to improve your score before applying for a mortgage. These include paying down high-interest debt or disputing any inaccuracies. Pro Tip: Always check your credit report before applying for a mortgage. This gives you time to fix any issues and helps ensure you’re in the best possible position when securing a loan.

Thinking You Need a 20% Down Payment

While the standard 20% down payment is often recommended, it’s not always necessary. There are several loan options available with lower down payments, such as FHA loans or lender-specific programs. These may allow you to put down as little as 3-5%. However, if you’re able to make a 20% down payment, this can be beneficial in the long term. It may help you avoid private mortgage insurance (PMI), which adds to your monthly payment. Pro Tip: Look into government-backed loans or ask a mortgage broker about programs that offer low down payment options. These are useful for anyone considering mortgage assumptions concerning down payments.

Believing the Lowest Interest Rate is Always the Best Option

It’s easy to assume that the lowest interest rate will always result in the best mortgage deal. While the interest rate is certainly an important factor, other aspects of the mortgage should also be considered. For example, loan terms, fees, and closing costs can add up over time. These can make a “low-rate” mortgage more expensive in the long run. Pro Tip: Focus on the overall cost of the mortgage, not just the interest rate. Compare different loan offers to see what works best for your financial goals. Avoid making mortgage assumptions solely based on the interest rate.

Assuming Your Mortgage is Set in Stone After You Sign

Many homebuyers believe that once they’ve signed the mortgage documents, they’re stuck with the terms forever. However, that’s not true! Refinancing your mortgage is always an option if interest rates drop or your financial situation changes. Additionally, many homeowners can change their mortgage type. This can be from a variable to a fixed-rate mortgage or adjusting the loan term. Pro Tip: Keep an eye on interest rates and your personal finances. Refinancing might be a good option down the road if it can save you money. Many assumptions made initially can be adjusted with appropriate mortgage refinancing.

Thinking All Lenders Offer the Same Deal

Not all mortgage lenders are the same. While some lenders might offer competitive rates and favourable terms, others may have hidden fees or restrictive loan conditions. These could cost you more. Working with a knowledgeable mortgage broker, like Truth Group, ensures that you’re not just getting a good deal but the right deal for your unique financial situation. Pro Tip: Shop around and talk to multiple lenders to find the best mortgage deal for you. A mortgage broker can help you compare options and negotiate terms on your behalf.

Believing Your Mortgage Is Your Only Monthly Payment

Homeownership involves more than just your mortgage payment. Don’t forget to account for property taxes, homeowner’s insurance, maintenance, and utilities when budgeting for your new home. These costs can add up quickly, and missing them in your planning could cause financial strain. Pro Tip: Make sure you’re budgeting for all aspects of homeownership, not just your mortgage. This will help you better prepare for the full financial commitment. Accurate budgeting prevents false mortgage assumptions on total home costs.

Thinking You Can’t Refinance Until Your Mortgage Is Paid Down Significantly

A common myth is that you have to wait until you’ve built up significant equity in your home before refinancing. The reality is that you can refinance your mortgage as soon as you’ve gained enough equity. In some cases, you can even refinance with little to no equity if you meet certain requirements. Pro Tip: Consider refinancing options early in your mortgage term. This allows you to take advantage of lower interest rates or to shorten your loan term. Refinancing could potentially save you a lot of money over the life of your loan. This dispels any mortgage assumptions about refinancing timelines.

Don’t Let Common Assumptions Cost You!

The mortgage process can be overwhelming, and it’s easy to make assumptions that could lead to costly mistakes. By staying informed, asking the right questions, and working with a trusted mortgage broker like Truth Group, you can avoid these pitfalls. You can make smarter financial decisions.

Are you ready to get started with your mortgage journey or refinance your current loan? Contact Truth Group today for personalised advice and expert assistance. Let us help you secure the best mortgage options to suit your needs and financial goals.
As a buyer’s agent, I can also help you source and secure your next home or investment. Whether it be residential, established property, house and land packages, or commercial property.