Recently, U.S. News reported that while mortgage rates have declined slightly, it’s hard to predict their exact path moving forward. For all the unknowns, there is also a lot of misinformation regarding mortgages. Under the right professional guidance, homebuyers and homeowners can be informed and confident when it comes to the mortgage process.

MORE NEWS: Achieving financial well-being: Helpful advice from Desert Financial

Addressing mortgage concerns

Part of what fuels discomfort surrounding mortgages typically derives from misconceptions and misunderstandings. Larry Jackson, vice president and managing director for Desert Financial Credit Union, helps people uncover the ins and outs of the mortgage process and illuminates the (many) resources available through partnering with a credit union. 

Clearing Misconceptions

One of the biggest mortgage misnomers is that homebuyers need to put down 20% to buy a house.

“That hasn’t been the case in over 30 years,” Jackson explains. “While you need to put 20% down to avoid private mortgage insurance, that doesn’t mean you have to put 20% down to get a home. In today’s market, some programs allow for as little as 3% and even 0% down.”

Here are a few more common mortgage myths (along with the facts):

  • The Fed controls interest rates. “Our rates are not affected by what the Fed does. Our rates are affected by the 10-year bond and what movement goes with the 10-year bond. As the bond moves up and down, so do mortgage rates,” Jackson says.
  • A prequalification is the same as a preapproval. Prequalification is an early estimate based on the financial information you provide, but it hasn’t been verified yet. Preapproval means a lender has reviewed and verified your income, assets and credit, making it a much stronger indicator of what you can borrow.
  • It’s best to wait for interest rates to go down. “There’s an old adage in the mortgage industry: ‘Marry the house; date the rate,’” Jackson says. “The payment differential is not huge between an eighth and a quarter. Waiting on the best rate may not be your best bet.” An initial slightly higher rate can often be refinanced later.
  • Your credit score is only part of what lenders look at. Your ability to pay on the loan is also an approval factor, but Jackson says to look at your credit score first and foremost. “Make sure there’s nothing [on your report] you don’t know about, and if you find something, take the time to fix it; your credit score is the biggest driver of your interest rate.”

Advantages of mortgage lending with a credit union

One of the greatest assets of credit unions, according to Jackson, is that they can leverage their existing loan products. We offer solutions that are built around people and we’re here for our membership and our community.”

Examples of some of Desert Financial’s mortgage options include:

  • Fixed-Rate Mortgages: Stable monthly payments with terms like 15- and 30-year options.
  • Adjustable-Rate Mortgages (ARMs): Lower initial rates that adjust over time.
  • First-Time Homebuyer Program: Offers no down payment, competitive rates and up to $7,500 in closing cost credits when you work with a real estate agent through the Home Plus program.
  • Community Heroes Program: Special benefits for teachers, military members, first responders and other community heroes, including no down payment and no private mortgage insurance (PMI).
  • Middle-Income Down Payment Assistance (MDPA) Grant: Eligible first-time homebuyers may receive up to $50,000 in down payment assistance when contributing at least $10,000 toward the purchase of their first home when funds are available from FHL Bank of San Francisco.
  • Home Equity Line of Credit (HELOC): Access funds using your home’s equity, with competitive rates and flexible terms.

Jackson also emphasizes technology’s place in helping Desert Financial gain a competitive edge. “By texting ‘DESERT’ to 72821, you can get prequalified in just a minute or two. 4 This makes the process quick and convenient.”

In closing, Jackson highlights the value of Desert Financial’s mortgage expertise. “We focus on education, communication and ease of doing business. Our mortgage professionals help educate members so they can make the best choices for themselves.”

To learn more, visit Desert Financial Credit Union.