Mortgage Myths That Cost Buyers Thousands
Today we’re cutting through the biggest mortgage myths that could cost you thousands—or a winning offer.
Welcome to Redwood Mortgage Insider. I’m Stuart Kiehne with Redwood Mortgage Services — helping buyers since 1999. If you’re planning to buy this year, avoid these traps and keep more money in your pocket.
Myth #1: “You need 20% down.”
You don’t. Many buyers use 3%–5% down conventional, 3.5% down FHA, 0% down VA/USDA (eligibility applies). The real question is: what down payment balances payment comfort, cash-to-close, and competitiveness for your situation?
Myth #2: “PMI is wasted money.”
Private Mortgage Insurance helps you buy sooner. On most conventional loans, PMI can fall off as equity rises. Compare its cost to the price appreciation you might miss by waiting years to save 20% in down payment.
Myth #3: “Rate is all that matters.”
Rate matters—but so do APR, points, lender credits, lock length, and closing costs. A slightly higher rate with meaningful credits can be smarter if you will move or refinance sooner. We’ll show you total cost over the time you expect to keep the loan.
Myth #4: “Pre-qualification = Pre-approval.”
Not even close. A quick “pre-qual” is an estimate. A full-doc, underwritten pre-approval reviews income, assets, credit, and automated findings—so sellers see you as solid. We also call the listing agent to vouch for your file.
Myth #5: “Student loans mean I can’t buy.”
You can often qualify with standard payments or income-driven plans. We’ll model debt-to-income and price ranges that keep your budget safe.
Myth #6: “FHA is only for poor credit.”
FHA can be great for many buyers: smaller down payments and flexible guidelines. Sometimes it even beats conventional payments. We price both and let the math decide.
Myth #7: “You can’t get help with down payment or closing costs.”
Options may include down-payment assistance, seller credits, and lender credits—subject to program rules and negotiations. We’ll stack the right mix without weakening your offer.
Myth #8: “Wait for rates to drop.”
Timing the market is hard. If the payment works today, buying sooner can capture equity growth and housing stability. If rates improve later, refinancing may reduce your payment. If they don’t, you’re already in the home you wanted.
Mini Case
Jess and Marcus thought they needed 20% and waited. Prices rose. We structured 5% down, compared PMI vs. waiting, and used a full-doc pre-approval with clean terms. They won the home—and built equity they’d have missed by sitting out.
Action Plan
Get pre-approved before you shop.
Review total cost, not just rate.
Ask us for 3 scenarios: conservative, target, and stretch—so you make offers confidently.
Keep cash for reserves and emergencies. A smaller down payment can be the smarter play.
Have questions or want custom numbers? Reach out to Redwood Mortgage Services.
Book a strategy call with Stuart
https://calendly.com/stuart-70/introduction-and-conversation