I have been in the mortgage business for over 20 years.  So as you might imagine, I have heard all kinds of, shall we say, “hot takes” about mortgages.  I have compiled a list of some of the less-enlightened ones. (Full disclosure: at least half of these I was guilty of saying before I got into this business). 

“You’re signing your life away for the next 30 years.” 

Well… the next 30 years OR UNTIL YOU SELL THE HOUSE, whichever comes first.  Or, until you pay off the loan early, which you can certainly do.  This is by far the dumbest one. 

“Until you pay off the loan, the bank owns the home – you’re just renting.” 

Perhaps we should first define the word “ownership”.  To me, ownership is someone who has effective legal control over the property, and who gets to claim the equity in the event of a sale.  When you own a home and you pay the mortgage as agreed, YOU decide who gets to live there, YOU decide how to decorate and make upgrades, and YOU get the value appreciation when the home sells.  What does the bank get? Guaranteed interest payments.  Nothing more.  In most cases, the bank doesn’t even get to decide how fast you buy them out of the property altogether! 

“The most important thing when buying a house is the interest rate.” 

Umm… NO.  See my previous post about this very thing. 

“You gotta be rich to have good credit.” 

Actually, credit scores do not take income into account at all.  It’s all about making payments on time, being judicious about obtaining new credit, and keeping revolving debt balances low relative to the debt limit. 

“It’s hard to buy your first home without government assistance.” 

The truth is the number of people who are helped by down payment assistance is vanishingly small.  The vast majority of people who are NOT helped by down payment assistance fall into 1 of 3 groups (in order of size of the group):

1. Even if they are eligible for down payment assistance, they still don’t qualify to purchase the home
2. They don’t qualify because the make too much money or have some other eligibility encumbrance
3. They do qualify for the assistance, and they also qualify as borrowers, but the use of down payment assistance actually results in worse mortgage terms than if they didn’t use the assistance!  So they decide not to take it. 

“I’m just waiting to save up money so I can put 20% down.”

Oh good lord.  If everyone did this, we would have A LOT more lifetime renters. The truth is PMI is waaaayyy cheaper than it used to be.  The PMI rate for conventional loans is a function of credit score, down payment, and (to a lesser extent) debt ratio.  If you’re waiting until you can put 20% down, you are wasting the first half of your wealth-building years. 

“Sometimes it’s smarter to rent than to buy.” 

This is a much-debated topic, so maybe it doesn’t belong on this list.  Obviously, you know which side I will be on, and I acknowledge I am not without bias.  But let me say this: I have never met a wealthy long-term renter (I know: correlation does not equal causation).  My main problem with most rent vs buy comparisons that show it is better to rent is they don’t compare apples to apples. Usually they compare the rent on the average rental property for an area to the mortgage payment on the average purchasable home in the area.  But since when is the average rental dwelling similar in size and quality to the average purchase dwelling?  The truth is single-unit dwellings available for purchase are usually larger and nicer than single-unit rental properties.  I mean, if your plan is to find the cheapest apartment and live there for 30 years and eat nothing but ramen noodles the whole time and invest every dime you save, then yeah, I guess you might come out “ahead” vs someone who spends 30 years enjoying life in their own home(s).  But I must say that this statement is technically true, because it starts with the word “sometimes”. But most instances where it’s better to rent have nothing to do with economics or the current state of the housing market or anything like that.  They have to do with how long you plan to be in city/area.  If you definitely plan to be somewhere for 3 years or less, you are probably better off renting.  But even then, you can always turn the home you purchased into a rental when you leave.